Factory activity in the U.S. mid-Atlantic region unexpectedly contracted in February for the second month in a row, falling to the lowest level in eight months as new orders tumbled, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index dropped to minus 12.5 from minus 5.8 in January, coming in far below economists’ expectations for positive 1.0.
It was the lowest level since June of last year and fell well short of even the lowest forecast for minus 4.
A reading below zero indicates contraction in the region’s manufacturing sector. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
The report is seen as one of the first monthly indicators of the health of U.S. manufacturing and was in contrast to data last week that showed activity in New York state rebounded.
“Everyone is talking about a stronger economy, but this data suggests the economy might not be as strong as people are expecting,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
U.S. stocks extended declines following the report as investors also took in data that showed existing home sales edged higher last month.
The gauge of new orders in the Philly Fed survey fell to minus 7.8, from minus 4.3.
The employment components showed improvement, with the gauge of the number of employees edging up to 0.9, from minus 5.2, and the average work week index rising to minus 1.6, from minus 8.3.
Shipments rose to 2.4 from 0.4, while the measure of prices paid was cut nearly in half to 8.9, from 14.7.
Respondents’ view on the coming months picked up, with the gauge of business conditions for the next six months rising to 32.1 from 29.2.