Is the Slump in U.S. Manufacturing Easing?

Yesterday’s November survey data from the Philadelphia Fed hints at the possibility that a stronger trend is emerging for the manufacturing sector. The headline number for this regional benchmark posted its first positive reading in three months.

The news follows Monday’s update of the New York Fed’s Empire State Manufacturing Survey, which ticked higher in November, albeit at a still-deeply negative level. The news prompted Paul Ashworth, chief US economist at Capital Economics, to remark that the New York Fed numbers “suggest that the manufacturing sector is deep in recession.”

The question is whether the downturn is ending? It’s too soon to say for sure, but there are some intriguing numbers to consider at the moment. The average of the two Fed indexes currently available for this month implies that manufacturing is headed for better days in the near-term future. The November reading is still preliminary, but based on the figures available to date the average ticked up to a four-month high. The mean remains in negative territory, but at least the trend is still moving in the right direction.

A third update for this month’s regional manufacturing activity arrives later this morning via the Kansas City Fed’s benchmark, which has also been moving closer to a neutral reading lately.