The Philly Fed Business Outlook Survey improved marginally and remains solidly in expansion territory for the fourth month. Key elements were strong.
This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the more negative of all the Fed manufacturing surveys.
The market was expecting the index value of +10.0 to +19.0 (consensus 13.0) versus the actual at 17.8. Positive numbers indicate market expansion, negative numbers indicate contraction.
Manufacturing firms responding to the June Business Outlook Survey indicated that regional manufacturing activity expanded this month. The survey’s indicators for general activity, new orders, and shipments were positive for the fourth consecutive month and improved from their readings in May. Current employment was also higher among the reporting firms this month. The survey’s indicators of future activity improved notably, suggesting that firms are more optimistic about continued growth over the next six months.
Indicators Reflect Continued Growth
The diffusion index of current general activity increased from a reading of 15.4 in May to 17.8 this month. The index has remained positive for four consecutive months and is at its highest reading since last September (see Chart). The current new orders and shipments indexes also moved higher this month, increasing 6 points and 1 point, respectively.
Indicators also suggest improved labor market conditions this month. The employment index remained positive for the 12th consecutive month and increased 4 points. The percentage of firms reporting increases in employment (22 percent) remained higher than the percentage reporting decreases (11 percent). The workweek index was also positive for the fourth consecutive month and increased 4 points.
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Econintersect believes the important elements of this survey are new orders and unfilled orders . Both unfilled orders and new orders are expanding but at a faster rate.
