(Kitco News) – The gold market is trading near $3,345 per ounce on Friday morning after the Philadelphia Federal Reserve's manufacturing sector survey held steady in contractionary territory this month.
The regional central bank said its manufacturing business outlook for June came in at -4, the same as May’s reading of -4. The data was still worse than expected, as economists were looking for a reading of -1 this month.
“Manufacturing activity in the region remained weak, according to the firms responding to the June Manufacturing Business Outlook Survey,” the report said. “The survey’s indicator for current general activity remained slightly negative, unchanged from May. The new orders index fell but remained positive, and the shipments index improved, turning positive; both readings remain below their nonrecession averages. The employment index turned negative and fell to its lowest value since May 2020. Both price indexes moderated but remain elevated. The survey’s future indicators suggest less widespread expectations for growth over the next six months.”
Gold prices held fairly steady near the bottom of their daily range in the minutes following the manufacturing data release. Spot gold last traded at $3,345.65 per ounce, down 0.73% on the day.
The key components of the index were mixed in June. “Almost 25 percent of the firms reported increases in general activity this month (up from 19 percent last month), while 28 percent reported decreases (up from 23 percent); 44 percent reported no change (down from 58 percent),” the Philly Fed noted. “The new orders index fell 5 points to 2.3 this month, and the shipments index rose 21 points to 8.3, its first positive reading since March.”
The employment picture worsened significantly in June. “The firms reported overall decreases in employment, and the employment index fell from 16.5 to -9.8 this month, its lowest reading since May 2020,” the report said. “More than 10 percent of the firms reported increases, while 20 percent reported decreases; 69 percent of the firms reported no change in employment levels. The average workweek index fell 4 points to -1.6.”
The Philly Fed report also showed prices continuing to rise on balance.
“The prices paid index fell 18 points to 41.4, its lowest reading since February,” the report noted. “Over 41 percent of the firms reported increases in input prices, while none reported decreases; 58 percent of the firms reported no change. The current prices received index fell 14 points to 29.5. More than 32 percent of the firms reported increases in prices received for their own goods, 3 percent reported decreases, and 65 percent reported no change.”
The survey’s broad indicators for future activity mostly improved, though expectations for growth were less widespread.
“The diffusion index for future general activity fell 29 points to 18.3 in June after rising 40 points last month,” the report said. “The share of firms expecting increases in activity over the next six months (45 percent) exceeded the share expecting decreases (27 percent); 19 percent expect no change. Similarly, the future new orders index dropped 28 points to 22.1, and the shipments index fell 23 points to 27.9. The firms continue to expect overall increases in employment, and the future employment index edged up from 23.0 to 24.6. The future capital expenditures index fell 13 points to 14.5.”
