Manufacturing activity in the Philadelphia region grew in July after contracting in June, an index tracked by the Federal Reserve shows.
The Philadelphia Federal Reserve Bank said Thursday that its regional index of manufacturing conditions rose to 3.2 in July. It had dropped to negative 7.7 the previous month, the first negative reading in nine months and the lowest level in two years. Any figure below zero indicates contraction.
The index remains significantly below levels reached earlier this year. That suggests the manufacturing sector is growing at a weak pace, the bank said. The index topped 40 in March.
The new orders index barely returned to positive territory, a sign companies aren't seeing much demand. New orders rose to 0.1 after having fallen to negative 7.6 in June.
The index tracks manufacturing conditions in eastern Pennsylvania, southern New Jersey and Delaware.
On a positive note, factories in the region said they hired more employees last month. And the prices they are paying for raw materials declined. Lower costs for commodities such as gas and cotton are reducing inflationary pressures.
High gas prices and supply disruptions stemming from Japan's earthquake slowed the economy in the late spring, which contributed to June's sharp drop in the index.