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Philly Fed Manufacturing Index Improves but Disappoints Expectations

The Philadelphia Fed Manufacturing Index experienced a slight uptick, reaching -10.6 in January from December's -12.8. Although the increase fell short of the anticipated -7.0, it indicates nuanced improvements in sectors like new orders, business conditions, and employment, despite the overall downward trend in manufacturing activity. Notably, the price index saw a significant drop to 11.3 from December's 24.3, suggesting a further decrease in price pressures. Our Take: The state of the manufacturing sector can be perceived as either half-empty or half-full, depending on the viewpoint. In light of the recent Beige Book's optimistic nuances, we are inclined to adopt a more positive outlook. It appears that manufacturing activity is stabilizing, and the subsiding inflation is fostering an uplift in sentiment from its previously low levels. Additionally, considering the close correlation with the ISM, we anticipate further positive shifts in the January data.


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