Mid-Atlantic factory activity at 2-year low, Philadelphia Fed says

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FILE PHOTO: The Mead-Westvaco paper mill plant is seen on a rainy day in Covington, Virginia

(Reuters) – Factory output growth in the U.S. Mid-Atlantic region decelerated far more than expected in May, and the business outlook for the next six months is the weakest in more than 13 years, a regional Federal Reserve bank survey showed Thursday.

The Philadelphia Fed’s benchmark manufacturing index slumped to 2.6 this month from 17.6 in April, well shy of the expectation for a reading of 16 among economists polled by Reuters. That was the lowest level in two years.

A reading above zero indicates expansion.

Readings of employment and inflation both eased, with the employment index hitting the lowest in a year. The prices paid component was the lowest in three months but remained historically high.

The outlook for business over the next six months slumped to the lowest level since December 2008, at the height of the global financial crisis.

(Reporting By Dan Burns; Editing by Chizu Nomiyama)