(Kitco News) - The gold market is trading at session highs after the Philadelphia Federal Reserve said its manufacturing sector survey surprised to the downside this month.
On Thursday, the regional central bank said its manufacturing business outlook for December worsened significantly, falling deeper into contractionary territory to -10.5, compared to November’s reading of -5.9. The data was far worse than expected as economists were looking for a reading of -3.
“Responses to the December Manufacturing Business Outlook Survey suggest overall declines in the region’s manufacturing sector,” the Philly Fed wrote in the report. “The indicators for current activity, new orders, and shipments were all negative. On balance, the firms continued to indicate overall increases in prices and mostly steady employment.”
This is the index’s 17th negative reading in the past 19 months.
The gold market is posting fresh highs after the latest surprising economic data. Spot gold rose from $2,035.90 just before the 8:30 am EST release to $2,044.67 at the time of writing, and is up 0.54% on the day.
The key components of the index were largely negative. The New Orders Index collapsed from 1.3 last month to -25.6 this month, while the Shipments Index rose 7 points but remained in negative territory at -10.8.
The labor market components also declined, with the Employment Index coming in at -1.7 after November’s 0.8 reading.
The report also noted a rise in inflation pressures, which should be a concern for Fed watchers. The Prices Paid Index increased to 25.1, up from November’s reading of 14.8.
“The survey’s broad indicators for future activity improved,” they noted, “suggesting more widespread expectations for growth over the next six months.”
