April 2017 Philly Fed Manufacturing Survey Declined But Remains Firmly In Expansion

The Philly Fed Business Outlook Survey declined again but remains firmly in expansion. Key elements likewise declined.

Analyst Opinion of the Philly Fed Business Outlook Survey

There is continuing significant strength in this survey from new orders even with the decline. Note that last month, Federal Reserve data shows manufacturing declined and the regional fed surveys all said manufacturing 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 then the others recently.

The index moved from +32.8 to +22.0. Positive numbers indicate market expansion, negative numbers indicate contraction. The market expected (from Bloomberg / Econoday) 20.0 to 35.4 (consensus +26.0).

Results from the April Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand, but at a slower pace than last month. The diffusion indexes for general activity, new orders, and shipments remained positive but fell from their readings in March. The current employment index, however, improved slightly and continues to suggest expanding employment in the manufacturing sector. The survey’s future indicators continued to reflect general optimism but retreated from their high readings in the first three months of the year.

Current Indicators Continue to Reflect Growth

The index for current manufacturing activity in the region decreased from a reading of 32.8 in March to 22.0 this month. The index has been positive for nine consecutive months and remains at a relatively high reading but has moved down the past two months (see Chart 1). Thirty-seven percent of the firms indicated increases in activity in April, while 15 percent reported decreases. The current new orders and shipments indexes remained at high readings but declined 11 points and 10 points, respectively. Both the delivery times and unfilled orders indexes were positive for the sixth consecutive month, suggesting longer delivery times and increases in unfilled orders.