Manufacturing growth in the US Mid-Atlantic region accelerated much more than expected in June, suggesting the nation-wide factory sector could be in for a surprisingly strong recovery, data showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index was at 18.0 in June, up from 4.2 in May. Economists polled by Reuters had forecast a reading of 7.0.
Any reading above zero indicates growth in the region's manufacturing. The index has been above zero for sixth straight months. Stocks pared their losses and the dollar rose on the data. Prices of government bonds, which usually benefit from signs of weakening economic growth, slipped.
"I wouldn't overemphasise this number. Wall Street pays attention to it because it is very timely, but it tends to exaggerate ups and downs. Still, it is yet another sign that you are seeing some bounce in the manufacturing sector," said Cary Leahey, economist and managing director at Decision Economics in New York. The new orders index, a gauge of future growth, surged to 18.3 in June from 8.7 in May.
The survey covers factories in a region encompassing eastern Pennsylvania, southern New Jersey and Delaware and is looked at closely as one of the first indicators of the health of the US manufacturing sector.
The report followed data released earlier in the day showing the number of US workers filing initial claims for jobless aid rose last week, suggesting some softening in the US labour market.
Still, a forward-looking economic gauge released pointed to a pick-up in growth. The Conference Board, a private research firm, said its index of leading economic indicators rose 0.3 percent in May, suggesting the economy will strengthen through the summer and into the fall.
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