Aug 20, 2021 - Economy

A warning from the mid-Atlantic on manufacturing

Data: Philly Fed; Chart: Axios Visuals
Data: Philly Fed; Chart: Axios Visuals

In another sign that growth is cooling, manufacturing activity grew by less than expected in the Pennsylvania, New Jersey and Delaware area.

Why it matters: Economists are getting concerned about how the current wave of COVID infections may be affecting growth — as evidenced by the cuts to GDP estimates.

State of play: The Philly Fed’s August Manufacturing Business Outlook Survey, the second of the major monthly regional manufacturing reports, showed that the rate of growth slowed as COVID has been spreading.

  • The report’s current activity index unexpectedly fell to 19.4 in August from 21.9 in July. This was the lowest reading since December, and it was worse than the 23.0 expected by economists.
  • While any number above 0 signals growth, the decline reflects deceleration.

What they’re saying: “The manufacturing recovery globally is moderating, but it is not rolling over,” Pantheon Macroeconomics’ Ian Shepherdson said.

What to watch: The Richmond Fed’s manufacturing report comes on Aug. 24. That’ll be followed by the Kansas City Fed’s on Aug. 26 and the Dallas Fed’s on Aug. 30.

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