Philadelphia Fed February Business Index Worsens to -12.5 Vs -5.8 in January

By Kathleen Madigan

Business conditions for mid-Atlantic manufacturers unexpectedly worsened this month after falling into contractary territory in January, according to a report released Thursday by the Federal Reserve Bank of Philadelphia.

The Philadelphia Fed said its index of general business activity within its regional factory sector fell to -12.5 after dropping to -5.8 in January.

Economists surveyed by Dow Jones Newswires expected the latest index to improve to 3.0. Readings under zero denote contraction, and above-zero readings denote expansion.

Earlier Thursday, data provider Markit said its flash reading for factory activity in the entire U.S. slowed to 55.2 from a final January reading of 55.8. But output jumped to its highest in almost two years.

Within the Philadelphia Fed survey, the subindexes generally were mixed this month.

The new orders index declined to -7.8 from -4.3 in January, but the shipments index increased to 2.4 from 0.4.

Labor conditions improved slightly. The important hiring index rose to 0.9 from -5.2 in January. The workweek index improved to -1.6 from -8.3.

The prices-paid index slowed to 8.9 from 14.7. The prices-received index rose to -0.5 from -1.1.

Manufacturers in Philadelphia feel more upbeat about the future.

The expectations index for business conditions over the next six months increased to 32.1 from 29.2. The expected- employment index advanced to 14.9 from 10.7 in January.

-Write to Kathleen Madigan at kathleen.madigan@dowjones.com

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