A new report from the Federal Reserve Bank of Philadelphia showed that manufacturing activity in the Mid-Atlantic region of the country cooled this month, as the general business conditions index fell from +32.8 to +22.0. That was the second monthly decline in a row, worse than economists had expected, and the lowest headline reading since December. However, it is worth remembering that any print above zero implies an overall expansion in activity, and this latest reading is still near the high end of the post-recession range.
Under the hood, current measures of new orders and shipments deteriorated but inventories, total employment, and hours worked all improved. Forward-looking indicators (six months ahead) generally softened in April but reported capital expenditure plans continued to increase. In fact, business managers in the April survey were also asked a few special questions about their capital spending plans for 2017 compared with actual spending levels in 2016. Overall, a 52 percent majority of surveyed firms indicated that total capital spending would increase this year compared with 2016, and "expected high sales growth and the need to replace capital goods" were the most cited reasons for the anticipated boost to capital outlays.
Sources: Econoday, Twitter, Bloomberg, ZH, FRBP, FRBSLPost author: Charles Couch