Philly Fed Business Outlook Increased to 9 in Feb., Topping Expectations
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(Updated - March 20, 2014 10:06 AM EDT)
Philadelphia Fed Business Outlook 9 vs 3.2 Expected
UPDATE - The press release is below:
Manufacturing activity rebounded in March, according to firms responding to this month’s Business Outlook Survey. The survey’s broadest indicators for general activity, new orders, and shipments increased and recorded positive readings this month, suggesting a return to growth following weather-related weakness in February. Firms’ employment levels were reported near steady, but responses reflected optimism about adding to payrolls over the next six months. The survey's indicators of future activity reflected optimism about continued growth over the next six months.
Indicators Suggest Activity Rebounded This Month
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from a reading of -6.3 in February to 9.0 this month, nearing its reading in January (see Chart). The current shipments and new orders indexes also returned to positive readings this month. The demand for manufactured goods, as measured by the current new orders index, increased from -5.2 to 5.7 this month. Shipments also increased, with its index rising 16 points to a reading of 5.7. Firms reported, on balance, shorter delivery times and an increase in unfilled orders this month. Lower inventories were also reported in March.
Indicators suggest stable labor market conditions this month. The employment index remained positive for the ninth consecutive month but edged 3 points lower, suggesting near-steady employment: The percentage of firms reporting increases in employment (17 percent) edged out the percentage reporting decreases (15 percent). The workweek index was slightly positive this month, following negative readings over the previous two months.
The survey's price diffusion indexes fell slightly this month, suggesting moderate price pressures. The prices received index decreased 3 points, to 4.3. Thirteen percent of the firms reported increases for their own products, while 9 percent reported price reductions. The largest percentage (77 percent) indicated that their firms’ prices were steady this month. The prices paid index edged slightly lower, to 13.9. Nineteen percent of the firms reported higher input prices, down from 24 percent in February.
Expectations for Growth Remain Optimistic
Firms remain optimistic about the growth of overall manufacturing activity for the next six months. The future general activity index remained at a relatively high reading; however, the index decreased 5 points from its reading in February (see Chart). Indexes for future new orders and shipments moved in opposite directions but remained at high readings. The future new orders index decreased 3 points, while the future shipments index increased 5 points. The future employment index continues to reflect confidence about future conditions: The index increased 13 points this month, marking its highest reading since last September. The percentage of firms expecting employment growth increased from 27 percent in February to 34 percent this month.
In special questions this month, firms were asked about their expectations for capital spending for 2014 compared with 2013 (see Special Questions). Nearly 49 percent of the firms indicated that total capital spending would increase this year compared with 2013; 21 percent indicated that spending would decrease. Expected high sales growth and the need to replace equipment were the most cited reasons for the increase. Among the firms that did not plan to increase capital spending, the most cited reasons were low sales growth, low capacity utilization, and a limited need to replace capital and technology equipment.
Summary
The March Business Outlook Survey suggests that activity in the region’s manufacturing sector rebounded following a month of decline in February. Firms reported increases in overall activity, new orders, and shipments this month. Price pressures remained moderate. The survey’s future activity indexes indicate that firms expect continued growth and employment increases over the next six months.
Philadelphia Fed Business Outlook 9 vs 3.2 Expected
UPDATE - The press release is below:
Manufacturing activity rebounded in March, according to firms responding to this month’s Business Outlook Survey. The survey’s broadest indicators for general activity, new orders, and shipments increased and recorded positive readings this month, suggesting a return to growth following weather-related weakness in February. Firms’ employment levels were reported near steady, but responses reflected optimism about adding to payrolls over the next six months. The survey's indicators of future activity reflected optimism about continued growth over the next six months.
Indicators Suggest Activity Rebounded This Month
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from a reading of -6.3 in February to 9.0 this month, nearing its reading in January (see Chart). The current shipments and new orders indexes also returned to positive readings this month. The demand for manufactured goods, as measured by the current new orders index, increased from -5.2 to 5.7 this month. Shipments also increased, with its index rising 16 points to a reading of 5.7. Firms reported, on balance, shorter delivery times and an increase in unfilled orders this month. Lower inventories were also reported in March.
Indicators suggest stable labor market conditions this month. The employment index remained positive for the ninth consecutive month but edged 3 points lower, suggesting near-steady employment: The percentage of firms reporting increases in employment (17 percent) edged out the percentage reporting decreases (15 percent). The workweek index was slightly positive this month, following negative readings over the previous two months.
The survey's price diffusion indexes fell slightly this month, suggesting moderate price pressures. The prices received index decreased 3 points, to 4.3. Thirteen percent of the firms reported increases for their own products, while 9 percent reported price reductions. The largest percentage (77 percent) indicated that their firms’ prices were steady this month. The prices paid index edged slightly lower, to 13.9. Nineteen percent of the firms reported higher input prices, down from 24 percent in February.
Expectations for Growth Remain Optimistic
Firms remain optimistic about the growth of overall manufacturing activity for the next six months. The future general activity index remained at a relatively high reading; however, the index decreased 5 points from its reading in February (see Chart). Indexes for future new orders and shipments moved in opposite directions but remained at high readings. The future new orders index decreased 3 points, while the future shipments index increased 5 points. The future employment index continues to reflect confidence about future conditions: The index increased 13 points this month, marking its highest reading since last September. The percentage of firms expecting employment growth increased from 27 percent in February to 34 percent this month.
In special questions this month, firms were asked about their expectations for capital spending for 2014 compared with 2013 (see Special Questions). Nearly 49 percent of the firms indicated that total capital spending would increase this year compared with 2013; 21 percent indicated that spending would decrease. Expected high sales growth and the need to replace equipment were the most cited reasons for the increase. Among the firms that did not plan to increase capital spending, the most cited reasons were low sales growth, low capacity utilization, and a limited need to replace capital and technology equipment.
Summary
The March Business Outlook Survey suggests that activity in the region’s manufacturing sector rebounded following a month of decline in February. Firms reported increases in overall activity, new orders, and shipments this month. Price pressures remained moderate. The survey’s future activity indexes indicate that firms expect continued growth and employment increases over the next six months.
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