Philly Fed manufacturing index signals steady growth at high level in October

Bloomberg News/LandovA welder works on assembly of a new container ship being built in Philadelphia.

The numbers: The Philadelphia Fed manufacturing index fell slightly to 22.2 in October from 22.9 in September, the regional district of the central bank said Thursday. That's better than expected. Economists has expected a slight pullback to 20.5 after the factory index had jumped 11 points in September.

Any reading above zero indicates improving conditions.

What happened: The new-orders index slipped to 2.1 points to 19.3, while the shipments index rose 4.9 points to 24.5. Inventories, unfilled orders and delivery times had nearly no change near zero. Upward pressure on input prices have moderated.

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Big picture: The Philadelphia manufacturing index has averaged 23.1 this year, down from 27.4 in 2017, but still strong. The U.S. factory sector has been steady and healthy, and boosted by fiscal stimulus, economists said.The Empire State factory index, released Monday, rose 2.1 points to 21.1 in October. The two regional manufacturing reports are of interest to traders primarily because they are seen as an early forecast of the national Institute for Supply Management factory survey due in two weeks.

What are they saying?: "In short, largely in line with recent trends, so fairly strong," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

Market reaction: Stocks DJIA, +0.26% opened lower Thursday, extending the declines from Wednesday after the minutes of a Federal Reserve meeting showed interest rates are likely to keep climbing.