Philly Fed Mfg Slips in May, Only Modest Uplift In Prices Received

• The Philly Fed manufacturing index fell by more than expected in May to 4.5 (cons 7.8) as it almost fully unwound the sharp increase to 15.5 in April.
• There were some notable outright declines in both shipments (from +19.1 to -1.2) and new orders (from +12.2 to -7.9) for both their lowest since January.
• Prices paid eased from 23.0 to 18.7 after some volatile months, with that 23 in April following just 3.7 in March. It’s back close to the average 18.6 through 2023.
• Prices received meanwhile increased from 5.5 to 6.6, but with the index essentially plateauing in the year to date with an average of 5.8 after the 11.4 in 2023.
• Six-month ahead price components implied softer increases than in April.

On the special looking forward looking questions:

• “Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 3.0 percent, unchanged from when this question was last asked in February.”
• “The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.5 percent over the next four quarters, down from 4.0 percent.”