WASHINGTON – A measure of factory activity in the Philadelphia region slipped last month, but remained at a healthy level, evidence that U.S. manufacturing output is holding up despite signs of a global slowdown.
The Federal Reserve Bank of Philadelphia said Thursday that its index of regional factory activity slipped to 20.7 from 22.5 in September. Any reading above zero indicates growth. It is the second drop in a row after the index reached a three-year high in August.
Still, economists were reassured by the data, partly because the decline was much smaller than Wednesday’s sharp drop in the New York Fed’s regional manufacturing index. And the reading of 20.7 remains much higher than the average of 10.3 in the first half of this year.
In addition, the index follows a separate Fed report that showed factory output nationwide grew 0.5 per cent in September. Steady manufacturing output could provide an anchor for the U.S. economy as financial markets have plunged over the past week because of worries about slower global growth.
The manufacturing data “are helpful reminders that the slowdowns evident in China and the euro-zone and the slightly stronger dollar are not having the devastating impact on the US economy that the financial markets now apparently believe,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note to clients.
Gauges of shipments and employment slipped, but new orders rose, suggesting growth could pick up in coming months.
The Philadelphia Fed’s survey covers manufacturing in Pennsylvania, New Jersey and Delaware.
Also Thursday, the Labor Department said that applications for unemployment benefits fell sharply last week to a 14-year low. The weekly applications are a proxy for layoffs. The steep decline suggests that employers are confident enough in the economy to hold onto their staffs.