Manufacturing slows down: business confidence drops in October in the Philadelphia area

General activity index turns negative, but companies remain optimistic about the future. Employment holds steady, prices remain high.

After a rebound in September, manufacturing activity in the Philadelphia region showed mixed signals in October. According to the latest survey by the Federal Reserve Bank of Philadelphia, the general activity index dropped sharply from +23.8 to -12.8 points — the lowest level since April.

The decline reflects an increase in the share of firms reporting a slowdown (25%, up from 17% last month) and a decrease in those reporting growth (12%, down from 40%). The majority (58%) reported no change.

Despite the overall slowdown, some indicators remained positive: the new orders index rose by 6 points to 18.2, while the shipments index, though down by 20 points, stayed positive at 6.0.

On the employment front, the situation remained relatively stable. The employment index dipped slightly to 4.6, still indicating overall job growth. Only 7% of firms reported a reduction in staff, compared to 12% that reported increases; the vast majority (81%) reported no change in employment levels. The average workweek index also edged down to 12.8 from 14.9.

Prices, meanwhile, remain elevated. Both the prices paid and prices received indexes increased, highlighting ongoing inflationary pressures.

Despite the mixed signals, the survey shows a degree of optimism: expectations for the next six months continue to point to growth, confirming a fundamental confidence in the manufacturing sector’s recovery potential.