Economy

Philadelphia Fed Manufacturing Outlook Weakens

October 16, 2014

The Manufacturing Business Outlook published by the Federal Reserve Bank of Philadelphia dropped slightly in October. The index for current activity slipped from 22.5 to 20.7 with 34 percent of respondents reporting an increase in activity while 14 percent reported a decrease.

The current shipments index remained positive although dropping to 16.6 from 21.6 in September. Inventories grew according to manufacturer response; the current inventory index increased 9 points to its highest reading in 10 months.

The employment index decreased by nine points but remained positive for the sixteenth consecutive month at a reading of 12.1.

The prices paid index was relatively unchanged at 27.6. Higher input prices were reported by 29 percent of firms and increase from 13 percent in September. The prices received index was at its highest reading since April 2011 at 20.8.

Looking toward the future, manufacturers expect general business activity to weaken in the next six months and posted a 2 point decline for that index. Future new orders remained flat while the future shipments index fell 6.5 points. Overall, manufacturers remained optimistic about future business activity. Optimism for future employment growth fell, but one third of respondents said they are planning to hire in the next six months.

Manufacturing companies reported capacity utilization at 78 percent, up from 76.5 percent a year ago.