US manufacturing sees dip in October from September's surge

Manufacturing performance in the US remains good but is slightly depressed this month, as the Philadelphia Fed manufacturing survey comes in at 19.8 for October, falling from September's 22.3 surge but exceeding expectations of 15.0.

Growth was seen in new orders, shipments (20.4, down only slightly from 21.2) and employment (15.4, from 10.3), with indicators of future activity suggesting continued optimism. Demand for manufactured goods, as measured by the current new orders index, went up six points, to 27.5 - the highest reading since March 2011. The weighted average of these more tangible indices increased to a 31-month high of 15.3, from 9.9.

23 per cent of businesses reported rises in employment, well exceeding the eight per cent that reported decreases.

Amna Asaf of Capital Economics comments:

The slight drop back in the headline index of the US Philly Fed manufacturing index... suggests that the government shutdown barely had any impact on business activity in the region.

Note that the headline index is based on a separate question about general business conditions and while the Fed's latest Beige Book (released yesterday) did highlight that overall activity in the region slowed down to "a modest pace of growth", manufacturers have been doing much better.

Overall quite encouraging and together with the Empire State index, released earlier this week, the two regional surveys suggest that the national ISM manufacturing index may remain around the 56.2 level in October as well.