By Greg Robb, MarketWatch WASHINGTON (MarketWatch) -- Factory activity continued to expand in January in the Philadelphia region, but at a slower pace than in the prior month, the Philadelphia Federal Reserve Bank said Thursday. The Philly Fed index declined to 15.2 in January, from 22.5 in December, surprising economists who had expected the index to slip to 17.0. Readings above zero in the diffusion index indicate expansion in the region's factories. The index has been positive for five straight months. The new orders and shipments indexes fell back from December levels. The current employment index remained in negative territory but rose to its highest level since February 2008. The drop in the Philadelphia index put it more in line with activity in the New York region. Last week, the New York Fed said its Empire State factory activity index rose to 15.9 in January from 4.5 in the prior month. The Philly Fed and New York indexes are followed closely by economists looking for clues into the strength of factory activity nationwide. The Institute for Supply Management publishes a monthly survey of factory activity across the country that is considered one of the best indicators of the current health of the economy. The ISM factory index rose to a four-year high of 55.9 in December from 53.6 in the previous month Today's report suggests that the ISM index may slip in January, but economists caution that the regional surveys have not been such good predictors of the national ISM data in recent months. In other economic releases on Thursday, the Labor Department said first-time claims for jobless benefits jumped by 36,000 to 482,000 last week. Claims at highest level since early Nov. In addition, the index of leading economic indicators increased a sharp 1.1% in December.

Source