Philly Fed Survey Reports 4th Month of Weak Business Conditions
The Philadelphia Federal Business Outlook Survey for August reported weak business conditions. Although the main diffusion index of current activity increased 6 points, the reading was still in negative territory at -7.1. August marks the 4th month in a row for negative readings, with almost 30% of firms reporting declines in business activity. Indexes for new orders and shipments both registered negative readings with only slight improvement from July.
Labor conditions also worsened in August as firms reported declines in employment and shorter work hours. The current employment index remained in negative territory at -8.6 while twice as many firms reported decreases in employment compared to those reporting increases. The average workweek index slightly but not enough to push it into positive territory.
Indexes for prices paid and prices received both increased m-o-m to readings of 11.2 and 2.8 respectively. There were more firms reporting higher input prices compared to last month, up to 26% from 19% in July. However, the majority of firms (73%) reported steady prices for their own goods.
The 6-month indicators show firms expect growth, even while the readings dropped from July. The future general activity index dropped from 19.3 to 12.5, with 35% of firms expecting increased business activity for the future. Both future new orders and shipments indices dropped but still remained positive. The future employment index stayed positive with 20% of firms expecting to increase employment, compared to only 9% expecting to decrease employment.
Source: Federal Reserve Bank of Philadelphia