New orders and shipment volume rebounded, driving an unexpected expansion of manufacturing activity in Philadelphia.

Manufacturing activity in the Philadelphia area unexpectedly expanded in January, led by a rebound in new orders and shipments, marking the fastest pace in four months. The Philadelphia Federal Reserve said on Thursday that its manufacturing index rose to 12.6 in January, the highest level since September of last year. The survey showed that over 23% of the firms surveyed reported an increase in activity, while about 11% reported a decrease. New orders and shipments indexes rose significantly, while the employment index declined slightly but still indicated overall job growth. The inventory index fell to its lowest level since July of 2024. Meanwhile, firms continued to report overall price increases, although the rate of increase slowed slightly, with the price index remaining well above long-term average levels. However, the future activity index decreased, marking the weakest optimism since July of last year, but still indicating overall growth in the next six months.