The Philadelphia Fed’s current general activity diffusion index fell to -0.4 in May 2026 from 26.7 in April, well below the consensus forecast of +18. The index had risen for four straight months before this print. Negative readings indicate that more surveyed manufacturers reported declines than increases in regional activity.
The component detail is where the story is. New orders fell 35 points to -1.7, the lowest reading since April 2025. Shipments dropped 29 points to 4.9. The employment index improved 2 points to -2.8 but stayed negative for the third time in four months, signaling continued job shedding in the sector. Prices paid fell 11 points to 47.9 and prices received dropped 7 points to 26.3; both remain above long-run averages.
The contradiction worth flagging sits in forward expectations. The future general activity index rose 12 points to 53.2, the highest since June 2021, with roughly two-thirds of firms expecting activity to increase over the next six months. The future prices paid index jumped 20 points to 70.0. Surveyed manufacturers reported weak current orders and persistent input-cost pressure today, alongside the strongest forward optimism in nearly five years.