(Kitco News) - After seeing solid growth over the last four months, manufacturing activity in the Philadelphia region hit a brick wall in May, falling sharply back into contraction territory, according to the latest data from the Philadelphia Federal Reserve.
The regional central bank said its manufacturing business outlook index for May dropped to -0.4, compared to April’s reading of 26.7. The data was significantly weaker than expected, as economists had been looking for a reading of 17.6 this month.
“Responses to the May Manufacturing Business Outlook Survey suggest an overall weakening in the region’s manufacturing activity. The indicators for current activity, new orders, and shipments all fell sharply this month,” the report said.
The disappointing manufacturing data is not having a significant impact on gold, as the market continues to focus on elevated bond yields and renewed strength in the U.S. dollar. Spot gold last traded at $4,513 an ounce, down 0.66% on the day.
The report showed broad-based declines in the index’s components. The New Orders Index fell to -1.7, down from 33.0 reported in April; at the same time, the Shipments Index fell to 4.9, down from the previous reading of 34.0.
The region’s labor market also continues to struggle. The Number of Employees Index showed a reading of -2.8, a slight improvement from April’s reading of -5.1.
Along with weak activity, the report also noted muted inflation pressures. The Prices Paid Index dropped to 47.9, down from April’s reading of 59.3.
