Shock collapse in Philly Fed poll contradicts upbeat jobless data

Ben Southwood
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FACTORY activity in the key mid-Atlantic region fell back into decline in January, US data revealed yesterday.

But across the US as a whole, 37,000 fewer new unemployment insurance claims were made in the week ending 12 January, when adjusting for seasonal variations – giving a much more optimistic picture of the economy.

However, the broader thrust of this Department of Labor data was less positive, with total insured unemployment rising 87,000 in the previous week, again when adjusting for seasonal movements, bringing it just 283,000 shy of last year’s figure for the same week.

The widely regarded Philly Fed index, which tracks manufacturing activity in the mid-Atlantic region of the eastern USA, slid from 4.6 in December to minus 5.8 this month.

The outcome defied analyst expectations the survey was set to show improvement, and indicating difficulty in the struggling manufacturing sector.

But the poll of firms still showed impressively solid hopes in the coming six months, with a score of 29.2 – up from 23.7 in December.

And figures for housing starts also lent support to hopes that the US economy is finally battling its way into a more robust recovery from the credit crunch than it has so far enjoyed.

Private housing starts rocketed up 12.1 per cent between November and December to reach 954,000 – a full 36.9 per cent higher than in December 2011.

And though permits for private building edged up just 0.3 per cent between November and December, according to the Census Bureau numbers, the December figure remained 28.8 per cent higher than in 2011.