Growth May Be Slowing In Mid-Atlantic Manufacturing

Rates of growth may finally be slowing in the Mid-Atlantic manufacturing sector based on the Philly Fed general conditions index which fell sharply to 11.9 in August. This is the lowest reading in nearly two years and is far below Econoday's low-end estimate of 20. It also follows June's reading of 19.9 which also marked a turn lower for this index.

New orders are the life blood of business and growth here is clearly slowing, at 9.9 and also near a 2-year low. Other readings also show moderation with backlogs building at a slower rate, shipments strong but also slowing, employment strong but easing slightly, and the workweek also down slightly. And price pressures, though highly elevated, are easing slightly both for inputs and selling prices.

Not easing is the 6-month outlook which is up nearly 10 points to 38.8. This is very solid and does not speak to fundamental concerns about tariffs and trade wars.

Slowing should be no surprise for this report which was the first of the regional and private reports to shoot higher after the 2016 election. Slowing in orders should help limit the risk of capacity constraints for this sample.