After a somewhat shocking surge back into expansion (and a big beat) in August, September's Manufacturing Business Outlook Survey from the Philly Fed puked all that improvement back and plunged back into contraction in September.
The headline index crashed from +12 to -13.5 (the index’s 14th negative reading in the past 16 months), with over 29% of the firms reported decreases (up from 13% last month), exceeding the 16% reporting increases (down from 25%)...
The indicators for new orders and shipments also declined.
The new orders index – which had been negative for 14 consecutive months prior to August – plunged from +16.0 last month to -10.2 this month.
The shipments index tumbled 9 points to -3.2 in September.
Confusingly, with jobless claims at YTD lows, Philly Fed employment index contracted for the 6th straight month...
More problematically for The Fed is that firms overall reported increases in prices (Prices Paid rose 5pts to 25.7)...
22 percent of the firms expect the impacts of COVID-19 mitigation measures to worsen, up from zero percent in June.
Additionally, 24 percent of the firms expect the impacts of energy markets to worsen, while over one-fifth of the firms expect the impacts of financial capital to worsen.
So growth slowing, prices rising... yet another signal of stagflationary pressures building.