U.S. factory activity in the Mid-Atlantic region sharply deteriorated in October, according to new data from the Federal Reserve Bank of Philadelphia. The Philly Fed Manufacturing Index dropped to -12.8, marking a steep reversal from +23.2 in September and far below economists’ expectations of +10.0. A negative reading reflects contraction in regional manufacturing activity.
The October plunge brings the index to its lowest level since April, when it hit -26.4, underscoring renewed weakness in the manufacturing sector after a brief rebound last month.
According to the report, 25% of firms reported a decrease in general activity up sharply from 17% in September while only 12% saw an increase, down from 40% in the previous survey. The majority (58%) reported no change.
A steep decline in shipments weighed heavily on the headline number, with the shipments index tumbling to 6.0 from 26.1. The employment index edged slightly lower to 4.6 from 5.6, still indicating modest job growth. However, new orders improved to 18.2 from 12.4, suggesting some resilience in demand despite overall weakness.
On the inflation front, cost pressures remain elevated. The prices paid index rose to 49.2 from 46.8, while prices received a measure of selling prices jumped to 26.8 from 18.8, indicating continued pricing power among manufacturers.
Despite the soft current readings, sentiment about the future improved. The six-month outlook index climbed to 36.2, its highest level since May, reflecting optimism that conditions may improve into early 2026.
In contrast, the New York Fed’s manufacturing survey, released Wednesday, painted a stronger picture. The Empire State Manufacturing Index rebounded sharply to +10.7 from -8.7, defying forecasts for another negative reading. The future business conditions index also surged to 30.3, signaling growing optimism across the north-eastern U.S.
Together, the mixed results highlight the uneven nature of the U.S. manufacturing recovery — with persistent cost pressures, weak output, and volatile regional conditions continuing to cloud the sector’s near-term outlook.
