In January, the Philadelphia Federal Reserve's manufacturing index in the United States reached a new high since April 2021, with the monthly increase being the largest in over four years
On Thursday, the Philadelphia Fed Manufacturing Index for January was 44.3, reaching a new high since April 2021, far exceeding the expected -5. The previous value for December was revised from -16.4 to -10.9. The month-on-month increase in the Philadelphia Fed Manufacturing Index for January was the largest in four and a half years since June 2020, when factories began to reopen after the COVID-19 shutdown. The latest data suggests that the long-term slump in the U.S. manufacturing sector may be coming to an end
On Thursday, the Philadelphia Federal Reserve's manufacturing index for January was 44.3, reaching a new high since April 2021, far exceeding the expected -5, with the previous value for December revised from -16.4 to -10.9. Negative readings indicate a contraction in manufacturing activity.
The month-on-month increase in the Philadelphia Federal Reserve's manufacturing index was the largest in four and a half years since June 2020, when factories began reopening after the COVID-19 shutdown. The January Philadelphia Federal Reserve manufacturing index also recorded the second-largest increase on record.
In terms of sub-indices, both new orders and shipments saw significant growth. The new orders index rose to 42.9, the highest level since November 2021. The shipments index climbed to 41.0, the highest level since October 2020. Employment levels also reached the highest point in six months. The prices paid index, which measures production input costs, rose to its highest level in two years in January.
Since the Federal Reserve began raising interest rates in early 2022 to combat inflation, the U.S. manufacturing sector has struggled for nearly three years. Rising borrowing costs have reduced demand and investment. The latest Philadelphia Federal Reserve manufacturing index suggests that the long-term slump in the U.S. manufacturing sector may be coming to an end.
The January Philadelphia Federal Reserve manufacturing report aligns with other business confidence surveys since Donald Trump was elected President of the United States. Trump will take office next week, promising tax cuts and deregulation, cracking down on immigration, and imposing broad tariffs. The Federal Reserve's Beige Book survey released on Wednesday showed that businesses are optimistic about the outlook but are also concerned about the risks posed by tariffs and immigration restrictions on prices and labor supply