Philly Fed Index Sinks to Lowest Since April — Gold Pops Above $4,300

Manufacturing in the mid-Atlantic hit an air pocket in October, according to the Philadelphia Fed’s latest Business Outlook Survey, even as raw-material prices kept marching higher and gold flirted with fresh highs. The headline activity index cratered 36 points to –12.8—its worst showing since April—while barely one in eight firms said conditions improved. Yet selling prices continued to climb, and traders looking for shelter from sticky inflation pushed the yellow metal to an intraday peak of $4,313 per ounce on Friday. The mixed message underscores a thorny backdrop: softer growth, but still-hot costs.

Drilling down, only 12 percent of manufacturers reported better business climate, compared with 25 percent who said things got worse; the majority saw no change. Shipments cooled, with that gauge falling 20 points to 6.0, yet new orders surprised on the upside for a second month, rising six points to 18.2. Employment held up, if barely: the jobs index slipped to 4.6 as nearly 12 percent of firms hired and 7 percent trimmed staff, while the average workweek eased. In other words, factories are tiptoeing forward but in a much leaner way.

Costs, however, refuse to cooperate with the “cooling inflation” narrative. The prices-paid index jumped to 49.2—meaning roughly half of firms are paying more for inputs and precisely zero report paying less. Downstream prices followed, as the prices-received gauge climbed eight points to 26.8; almost 28 percent of producers lifted their own price tags while a lonely 1 percent managed cuts. For businesses that sell physical goods, recouping those higher costs is a matter of survival, but for consumers it’s another tax—one that never shows up on a Treasury bill.

Curiously, executives sounded far cheerier about tomorrow than today. The future general-activity index rose to 36.2, and expectations for new orders hit their highest level since January at 49.8. Capital spending plans also perked up: 30 percent of firms anticipate bigger outlays over the next six months, and a separate question on 2026 budgets shows notable appetite for non-computer machinery, hardware, and software. Still, even this optimism carries an inflationary aftertaste—the forward prices-paid index sits at 59.8, while prices-received clocks in at 45.7. If those numbers hold, producers could be locked into an environment where costs rise faster than productivity.…