The Philly Fed's headline index, which is a measure of general sentiment based on a single question, can often read much differently than the assessment of actual conditions. And this is the case for the June report where the constructive looking 4.7 headline doesn't match the details which are almost uniformly negative.
New orders, at minus 3.0, are contracting for a second month while contraction in unfilled orders, at minus 12.6, is deepening. At minus 2.1, shipments are in a third month of contraction. Employment, at minus 10.9, has been in contraction for the entire year. The sample appears to be destocking and delivery times are shortening, both indications of weakness.
The only signs of actual life in this report are in prices. Input costs are going up, a reflection of fuel and raw materials, while selling prices are edging higher.
Otherwise this report, including the 6-month outlook which continues to show less and less optimism, does not confirm the strength of Wednesday's Empire State report and will not lift the outlook for what is a very flat factory sector.
The Philadelphia Fed manufacturing index held near zero in both May and April to indicate no significant change in the region's activity, a result that is also expected for June where the consensus is at only plus 0.8 percent. New orders posted a zero in April followed by minus 1.9 in May while contraction in unfilled orders deepened, to minus 8.8 in the May report. Similar results in the June report would likely lower the outlook once again for the nation's factory sector.