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.
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