US Philadelphia Fed Index Falls Negative For Seventh Consecutive Month

The June reading of the Philadelphia Fed’s manufacturing index unexpectedly fell to a reading of -17.1 from -15.6, marking the seventh consecutive month of contraction in the sector. A breakdown of the index shows an unsurprising surge in the prices paid component, as raw material costs skyrocket. However, like the Empire Manufacturing report we saw last week, producers appear to be having trouble passing on costs to customers as the prices received component actually slipped. Meanwhile, the indexes measuring new orders and shipments both fell negative as well, suggesting that demand remains tepid, while a decline in the employment gauge does not bode well for June unemployment and non-farm payroll reports.
The US dollar initially spiked lower on this bearish news, as the markets judge that given the fragile status of the US economy, the Federal Reserve is unlikely to raise rates next week in an attempt to fight inflation. – Terri Belkas, Currency Analyst for