Manufacturing conditions in the region improved slightly in July, but were well below economists' expectations, the Philadelphia Federal Reserve Bank said Thursday.
The broadest measure of manufacturing conditions dropped from 15.2 in June to 5.7 in July. Analysts polled by Thomson Reuters expected the Philly Fed business index to come in at 12. (Tweet This)
Any reading above zero indicates expansion in the region's manufacturing, which consists of eastern Pennsylvania, southern New Jersey and Delaware.
It is seen as one of the first monthly indicators of the health of U.S. manufacturing, leading up to the national report by the Institute for Supply Management.
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"The survey's indicators for general activity, new orders, and shipments all remained positive but moderated from their readings in June," the bank said.
The employment index also fell from 3.8 in June to -0.4.
The six-month capex outlook slipped to 7.7 from 8.1 the previous month.
"Bottom line, as seen with the NY survey, manufacturing activity in the Philly region rose modestly. The big jump in June was an anomaly and the July figures gave it back. For US manufacturing as a whole, modest growth also seems like the proper description," Peter Boockvar, chief marker analyst at The Lindsey Group, said in a note.
—Reuters contributed to this report.