(Reuters) – A measure of manufacturing activity in the U.S. Mid-Atlantic region slipped to the lowest level in nearly two years in December, with signs both contracting new orders and shipments remained sluggish in the factory sector.
The Federal Reserve Bank of Philadelphia said Thursday that its monthly manufacturing index unexpectedly fell to negative 16.4 for the second straight month – the lowest since April 2023 – from negative 5.5 in November. The median forecast among economists polled by Reuters was for a reading of 3.0. A negative reading indicates a contraction in activity.
The report’s new orders index fell to negative 4.3, the lowest since May, up from 8.9 in November.
Factory managers remained upbeat about prospects in six months’ time, but their growth outlook softened from a three-year high in November.
The Philly Fed regional report suggests that the factory sector, which accounts for just over 10% of the economy, continues to struggle to find its footing in the face of Federal Reserve interest rate hikes in 2022 and 2023. A rate cut in the latter half of this year is not expected to ease much and market-based measures mean borrowing costs remain notably higher than at the start of 2022, putting pressure on investment. continues
On Tuesday, the Fed reported that manufacturing output in November rebounded less than expected a month ago and production fell 1.0% year over year.
President-elect Donald Trump’s ambitions for hefty new tariffs on goods imported from abroad are also clouded in the view, which could trigger counter levies imposed on US exports by US trading partners.
(Reporting by Dan Burns; Editing by Chizu Nomiyama)
