The numbers: The Philadelphia Fed said Thursday its gauge of regional business activity moderated in February after a big gain in the prior month. The regional Fed’s business activity index fell to 23.1 from 26.5 in the prior month. The index was much stronger than the 9.1 reading in December. Any reading above zero indicates improving conditions. Economists polled by the Wall Street Journal expected a 19.2 reading. Any reading above zero indicates expansion in the manufacturing sector.
What happened: The Philly Fed headline index is based on a single stand-alone question about business conditions unlike the national Institute for Supply Management manufacturing index which is a composite based on components.
This month, the components were also weaker
The barometer on new orders slipped to 23.4 in February from 30 in the prior month. The shipments index inched down to 21.5 from 22.7 in January.
The measure on six-month business outlook sank to 39.5 from 52.8 in the prior month.
Big picture: Earlier this week, a similar index released by the New York Fed jumped from 3.5 to a reading of 12.1, the highest since July. Economists use the New York and Philadelphia regional indexes to gauge the strength of the national ISM index, which slipped 1.8 points to a still-healthy 58.7 in January, Manufacturers have learned how to cope with the Covid-19 pandemic and activity is humming along. It is the service sector that has been decimated by the deadly virus.
Market reaction: Futures contracts on U.S. stock-market indexes headed modestly lower Thursday, after the Dow Jones Industrial Average
saw its third straight record close in the prior day’s session.