Philly Fed Index Jumps to 10.3, Factory Activity Turns Positive

Factory activity in the Philadelphia region swung back into expansion territory in June. The Federal Reserve Bank of Philadelphia's manufacturing index rose 10.7 points to 10.3, flipping from a negative reading in May.

The headline number beat expectations. The new orders component also turned positive, climbing 14 points to 5.6. Shipments jumped 18 points to 12.7, the strongest reading in several months. Employment, however, slipped 2 points to 1.2, suggesting firms are still cautious on hiring.

Price pressures showed some easing. The prices paid index fell 5 points to 22.1, while prices received dropped 8 points to 11.3. That is a modest relief for a market watching the Fed's next move on rates.

The six-month outlook index rose 5 points to 38.2, a sign that manufacturers expect conditions to improve through the second half of the year. Capital expenditure plans also ticked up.

The Philly Fed survey is one of the first regional manufacturing reads each month. It often sets the tone for the national ISM manufacturing report due next week. A string of soft factory data had raised concerns about a broader slowdown. This print pushes back against that narrative, at least for now.

The dollar edged higher after the release. Treasury yields ticked up on the short end as traders trimmed bets on a September rate cut. The S&P 500 held near session highs, with industrial stocks leading.

The next data point on the calendar is the Richmond Fed manufacturing index, due Tuesday.