Factory activity increased in the Philadelphia region in October, but at a slower pace than in September, the Philadelphia Fed reported Thursday. The Philadelphia Fed Index fell to 6.8 in October from 10.9 in September, beyond economists' expectation of a drop to 7.5. Most strikingly, new orders came in at 2.7, a 12.4-point drop from September and a seven-month low. "This report is softer than the small headline dip suggests," said Ian Shepherdson of High Frequency Economics. Companies also reported price pressures, both in terms of their own costs and what they were able to charge for their goods. The prices paid index rose to 40.3 from 23.1 in September; prices received went up to 12.4 from 3.3. The optimism index gained 5.8 points to 41.5, but Tony Crescenzi at Miller Tabak said "it remains to be seen whether the increase is a knee-jerk reaction to the Fed's rate cut and signs of stability in the credit markets, or the result of actual improvements in conditions." In related news, the Conference Board's index of leading economic indicators continued its see-saw ride with a 0.3% gain in September, in line with analyst forecasts. "[W]hile the financial markets gyrated and the slump in housing intensified, the economy continued to perform at a slow but steady pace," said Ken Goldstein, labor economist at the Conference Board. The index fell a revised 0.8% in August.
Commentary: U.S. Growth Slows Since August: Beige Book • Leading Indicators Suggest Expansion: What's Wrong With This Headline? [August] • Economic Report Summary: Slow Housing Stats, Continued Rebound In Manufacturing [July] • Economic Report Summary: Negative Housing Reports Nix Short-Term Rebound [June]
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