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Thursday, February 20, 2014

Philly Fed Manufacturing Survey indicates Contraction in February

by Calculated Risk on 2/20/2014 10:00:00 AM

From the Philly Fed: February Manufacturing Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading of 9.4 in January to ‐6.3 this month. This was the first negative reading of the index in nine months.
The current employment index remained positive for the eighth consecutive month but declined 5 points from January.
emphasis added
This was well below the consensus forecast of a reading of 10.0 for February.

Also Market released their Flash PMI for February this morning that suggests faster manufacturing expansion:
February data suggested a solid rebound in U.S. manufacturing business conditions following the slowdown recorded during the previous month. This was highlighted by a rise in the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), which is based on approximately 85% of usual monthly replies, from 53.7 in January to 56.7 in February. The latest reading pointed to the fastest overall improvement in U.S. manufacturing business conditions since May 2010.

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

The flash manufacturing PMI provides the first indications that production has rebounded from the weather - related slowdown seen in January . Having slumped to a three - month low in January the PMI surged to its highest for almost four years in February, as companies reported business returning to normal after freezing temperatures and snow disrupted operations and supply chains.

Hiring also picked up to the fastest since last March, with the survey signalling approximately 15,000 jobs being created in February.

“While the strong PMI reading in part represents a rebound from the temporary weakness seen at the start of the year, further growth looks likely in coming months, suggesting the underlying health of the economy remain s robust. In particular, February saw the largest rise in backlogs of work seen since prior to the financial crisis, as well as a further steep fall in inventories of finished goods. Both point to ongoing growth of production and hiring in March.”
emphasis added