Manufacturing activity in Philadelphia, southern New Jersey and Delaware weakened in June, according to respondents to the Federal Reserve Bank of Philadelphia's monthly Business Outlook Survey.
The survey's broadest measure of manufacturing conditions -- the diffusion index of current activity -- decreased from 3.9 in May to minus 7.7, its first negative reading since last September and its lowest reading in 31 months, according to the Philadelphia Federal Reserve Bank.
The survey's indicators for activity and new orders turned negative this month, while indicators for shipments and employment fell but remained slightly positive.
Responses to the monthly survey, which has been conducted since 1968, suggested little overall improvement in the labor market this month.
The current employment index remained positive for the ninth consecutive month, but only 14% of the firms reported an increase in employment, while 10% reported a decline, according to the bank.
Among other highlights:
- Forty-seven percent of the companies indicated they had increased base prices since the beginning of the year, although 54% said they have been unable to pass on cost increases.
- Nineteen percent have instituted surcharges, and 14% have price-escalation clauses covering cost increases.
- Respondents also indicated that a large percentage of their suppliers have instituted surcharges covering recent cost increases: Seventy-one percent of the firms reported surcharges for transportation, 36% for commodities and 36% for energy.
Meanwhile, 17% of respondents reported higher prices for their own goods in June, while 12% reported price reductions.