Manufacturer index hurt by price hikes
Written on June 23, 2008
The manufacturing sector in the Philadelphia area - a bellwether for the rest of the nation - showed continued weakness in June as businesses struggle with rising prices for raw materials, according to a report released Thursday.
The Federal Reserve Bank of Philadelphia’s June Business Outlook Survey index weakened to minus 17.1 from minus 15.6 in May. That was softer than the minus 10 reading expected in a consensus of economists surveyed by Briefing.com.
The survey showed declines in general activity, new orders, shipments and employment.
"Cost pressures remain widespread, with a much larger share of firms reporting increases for input prices this month," the report said.
The report showed that 72% of the region’s manufacturers saw higher input prices in June cash advance loans. That’s an increase from 61% in May.
The bank’s prices paid index jumped 16 points, to 69.3 - its highest reading since November 1980.
Looking ahead, 65% of the firms expect price increases over the next three months, 15% expect price declines, and 20% expect prices to remain constant.
After significant improvement in expectations over the last two months, the bank’s future general activity index retreated in June, falling to 21.3 from a May reading of 28.2.
On the bright side, a full 40% of the firms surveyed expect growth in activity over the next six months while 18% expect a decline.
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