Region’s Manufacturing Growth Slowing But Still Positive
According to the latest data from the Federal Reserve Bank of Philadelphia, issued Thursday, its July index of factory activity declined to 5.7 from 15.2 in June. While any above-zero reading is a sign of expansion in the sector, the AP notes that the index has been in single digits each month in 2015 except for June, in contrast to a recent high of 40.2 for November 2014. For the month, measures of new shipments and orders were above zero, but fell. However, in “a sign of contraction,” employment and inventories measures fell below zero. Reuters reports that measures on new orders also dropped in July to 7.1 from 15.2 the previous month, and the employment index fell to -0.4, the first time it has dropped below zero since January. The AP suggests the index has slowed this year because manufacturers are attempting to rebound from “a brutal winter, a strong dollar hurting exports and cheaper oil prices cutting into equipment and material orders by energy firms.” And, despite the mixed news of the report, “manufacturers were slightly more optimistic about growth over the next six months.”
What This Means For Small Businesses
The Federal Reserve of Philadelphia’s latest economic data shows the Philadelphia region is seeing mixed results in efforts to recover following the recession. Although growth is still positive for the year, it is slowing, an indication of a slight cooling off of the economy. Small businesses in the area may begin to feel the effects of slowing manufacturing growth, particularly those working to provide services in the manufacturing sector. However, manufacturers remain optimistic about continued growth for the rest of 2015, a positive sign for small business owners.
NFIB previously noted the growing costs of manufacturing in the Philadelphia area.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.