Factory Activity Down in Philadelphia Area

Philadelphia, PA, Dec. 19, 2008--Manufacturing continued to contract in the Philadelphia region in December, although at a less-rapid pace than in the prior month.

The Federal Reserve of Philadelphia's business activity index rose to negative 32.9 in December from an 18-year low of negative 39.3 in November.

The small increase was unexpected. Economists had forecast the index would set a new low of negative 42.0.

However, capital expenditure plans remain "quite weak" in the region, according to Leonard Nakamura, an economist at the Philly Fed.

Plans to spend capital over the next six months tumbled to negative 21.6 in December from negative 9.0 in November.