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Manufacturing Business Outlook Slips in February, Erases Gains from Previous Month

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Industrial machinery for converting cellulose into a sheet of paper

Manufacturing business outlook declined in February, reflecting the contraction in general activity, new orders, and shipments during the period.

Source: Philadelphia Fed

XLI is down 0.64%, while VIS is down 0.83%.

The diffusion index for current activity stood at 16.0 in February, down by seven points from 23.2 in January and lower than 28.7 the same month last year. The latest reading mostly offset the increase recorded in January.

The majority, or 63% of the firms, reported no change during the month, while 26% indicated increases in current activity. Some 10% reported decreases in their activity for the month.

New orders fell to a two-month low of 14.2 from 17.9 in January and 25.7 in February 2021. Current shipments declined by seven points to 13.4 from 20.8 in January and 25.7 in February 2021, the lowest level since August 2020.

Outlook for the next six months also declined, with the diffusion index for general activity down to 28.1 from 28.7 in January, with over 38% of the firms expecting expansion while 10% predict a contraction.

The current employment index grew to 32.3, and the prices paid diffusion index fell to 69.3, with firms expecting prices to increase 5.0%.

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