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The numbers: The Philadelphia Federal Reserve’s business condition index jumped to 26.5 in January from 9.1 in December. This topped expectations of a reading of 10.5 in January, according to a Wall Street Journal poll of economists.
It’s the highest level since last February, just before the pandemic shut down the U.S. economy.
What happened: The six-month outlook rose to 52.8, from 43.1 last month. New orders, employment and shipments all jumped in January. There were signs of inflationary pressures in the supply chain.
Big picture: Manufacturing has been a bright spot in the U.S. economy. It has continued to grow despite the resurgence in the coronavirus pandemic. The ISM factory index hit 60.7% in December, its highest level since August 2018. This was the seventh straight month above the 50% mark that shows expansion. Manufacturing was much stronger in Philadelphia than in the New York region, where activity slipped to 3.5 this month.
What are they saying? “Looking ahead, manufacturing will stay on an upbeat track though we expect growth to soften as vaccines and the economy’s reopening unleash pent-up demand for deeply-damaged services,” said Oren Klachkin, lead U.S. economist at Oxford Economics.
Market reaction: U.S. stock benchmarks retreated early Thursday after the inauguration of President Joe Biden. The Dow Jones Industrial Average DJIA, -0.00%, the Nasdaq Composite Index COMP, +0.19% and the S&P 500 SPX, -0.01% closed at record highs on Wednesday.
