(Kitco News) - The gold market is trading at session highs after the Philadelphia Federal Reserve's manufacturing sector survey rose beyond expectations to return to positive territory this month.
On Thursday, the regional central bank said its manufacturing business outlook for January rose to 44.3, compared to December’s revised reading of -10.9. The data was much better than expected as economists were looking for a reading of -4.0 this month.
“Responses to the January Manufacturing Business Outlook Survey suggest an overall increase in the region’s manufacturing activity,” the report said. “The indicators for current activity, new orders, and shipments all rose sharply. On balance, the firms continued to indicate overall increases in prices, and both price indexes rose above their long-run averages. The firms also continued to report increasing employment levels.”
Gold prices shot up to fresh session highs in the minutes following the manufacturing data release, which came out at the same time as retail sales for December and weekly jobless claims. Spot gold last traded at $2,715.23, up 0.70% on the day.
The key components of the index improved this month. “Nearly 51 percent of the firms reported increases (up from 19 percent last month), far exceeding the 7 percent reporting decreases (down from 30 percent); 41 percent of the firms reported no change in current activity (down from 45 percent),” the report said. “The indexes for current new orders and current shipments both also rose sharply in January. The new orders index rose 47 points to 42.9, its highest reading since November 2021. Meanwhile, the shipments index increased 39 points to 41.0, its highest reading since October 2020.”
Firms also continued to report an increase in employment, with the employment index rising 7 points to 11.9 in January. “Almost 87 percent of the firms reported no change in employment levels this month,” they noted. “Nearly 13 percent reported increases, while 1 percent reported decreases. The average workweek index turned positive, rising from a revised reading of -3.7 to 20.3, its highest reading since March 2022.”
The Philly Fed report also showed price indexes moving above their long-run averages.
“On balance, the firms continued to report overall increases in prices, with both price indexes rising to recent highs,” the report said. “The prices paid index rose 5 points to 31.9 in January, its highest reading since December 2022. Nearly 36 percent of the firms reported increases in input prices, while 4 percent reported decreases; 60 percent reported no change.”
Meanwhile, the current prices received index rose 24 points to 29.7, its highest reading since January 2023. “Almost 35 percent of the firms reported increases in the prices of their own goods (up from 9 percent last month), 5 percent reported decreases (little changed), and 60 percent reported no change (down from 85 percent),” they said.
The survey’s broad indicators for future activity also rose, suggesting more widespread expectations for growth over the next six months.
