- The Washington Times - Thursday, February 20, 2003

PHILADELPHIA, Feb. 20 (UPI) — The Philadelphia Federal Reserve said Thursday manufacturing activity in the nation's mid-Atlantic region was mostly flat during February.

The regional Fed said its monthly business outlook survey showed that although one-third of the firms questioned reported higher new orders during the month, one-fifth reported lower orders, and other indicators suggested no improvement during the month.

The Fed said: "Expectations for growth diminished again in February, although manufacturing executives still expect conditions to improve over the next six months."

The Philadelphia Fed's diffusion index of current activity fell to 2.3 from 11.2 in January as only slightly more firms reported increases in activity this month than reported decreases.

The Fed said its shipments index fell significantly to zero from from 21.3 in January as new orders, which showed improvement over the past three months, continued to grow in February.

The current new orders index fell to 14.1 from 17.3, the inventory index remained negative but improved slightly to minus 15.7 from minus 17.3, and the unfilled orders index remained negative at minus 9.1, slightly down from its reading of minus 1.5 in the previous month.

The index for delivery times also fell, to minus 15.5 from minus 7.3.

The Fed said overall employment in the manufacturing sector was steady during the month. Seventy percent of firms reported steady employment levels and the percentage of firms reporting declines only slightly exceeded the percentage reporting increases.

The current employment index remained negative but improved to minus 0.9 from minus 6.1 in January. However, the index of average hours worked declined to minus 5.1 from 3.8 in January.

The regional Fed said although manufacturers still expect economic conditions to improve over the next six months, they have generally grown much less optimistic.

The percentage of firms expecting growth over the next six months, at 45 percent, tops the percentage of firms expecting declines at 20 percent.

Nevertheless, the Fed said the future activity index, which was 52.2 in December, declined again, to 24.7 from 32.6 in January.

The Philadelphia Fed report is one of the first readings on manufacturing each month. It is closely watched for hints of the overall health of the sector, which makes up about one-sixth of U.S. economic activity.

The Philadelphia Fed, one of 12 regional Fed banks, serves Delaware, eastern Pennsylvania and New Jersey.

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