General activity index falls 8 points to negative 31.3, weakest since depth of pandemic
The numbers: The Philadelphia Fed said Thursday its gauge of regional business activity slumped to negative 31.3 in April from negative 23.2 in the prior month. Any reading below zero indicates deteriorating conditions. This is the eighth straight reading below zero and the tenth in the last 11 months.
Economists polled by the Wall Street Journal expected a slight improvement to a negative 20 reading in April.
Key details: The barometer on new orders improved 5.5 points but remained at negative 22.7 in April. The shipments index rose a sharp 18.1 points to a negative 7.3 reading. The measure of the six-month business outlook rose to negative 1.5 from negative 8 in March.
Big picture: Manufacturing is struggling. The Fed’s Beige Book reported Wednesday that the factory sector was flat or down across the country.
A similar measure of factory activity in New York improved for the first time since November. The Empire State index jumped 35 points to 10.8 in April.
Josh Shapiro, chief U.S. economist at MFR Inc., said the Philadelphia Fed index is viewed as a leading indicator of the national ISM manufacturing index that will be released on May 1. The ISM factory index contracted for the fifth straight month in March.
“Manufacturing continues to face hurdles from softer demand for goods and higher borrowing costs,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, ahead of the report.
Market reaction: Stocks DJIA, -0.33% SPX, -0.60% were set to open lower on Thursday. The yield on the 10-year Treasury note TMUBMUSD30Y, 3.738% fell to 3.55%.