The Philly Fed Business Outlook Survey improved and remains in expansion. Key elements significantly improved.

Analyst Opinion of the Philly Fed Business Outlook Survey

Consider this a much stronger report than last month as key elements significantly improved.

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 but has been more positive than the others recently.

The index moved from +11.9 to +22.9. Positive numbers indicate market expansion, negative numbers indicate contraction. The market expected (from Nasdaq / Econoday) 13.9 to 21.1 (consensus +19.2).

Regional manufacturing activity continued to grow in September, according to results from this month’s Manufacturing Business Outlook Survey. The survey’s broad indicators for general activity, new orders, shipments, and employment remained positive and increased from their readings in August. The survey’s respondents reported diminished price pressures this month. Expectations for the next six months remained optimistic, but most broad future indicators showed some moderation.

Current Indicators Show Improvement

The diffusion index for current general activity increased 11 points this month to 22.9, returning the index to near its average reading for 2018 (see Chart 1). Over 38 percent of the manufacturers reported increases in overall activity this month, while 15 percent reported decreases. The new orders index increased 12 points to 21.4. This month, 42 percent of the firms reported an increase in new orders, up from 34 percent in August. The current shipments index also improved, increasing 3 points to 19.6. The current inventories index fell 19 points this month and recorded its first negative reading in seven months. The firms, on balance, reported an increase in unfilled orders and longer delivery times.

Econintersect believes the important elements of this survey are new orders and unfilled orders. New orders significantly declined but remains in expansion whilst unfilled orders moderately declined.