Philadelphia Fed Manufacturing Index Surprises to the Downside

Written by Sandy Williams

Manufacturing indicators were mixed in the September Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Philadelphia. The Bank suggests that responses may have been influenced by “volatility in the stock market and international news reports.”

The index for current manufacturing activity unexpectedly dropped from 8.3 in August to -6.0. It was the first time the headline index fell into a negative reading since February 2014. In contrast, demand indicated by the index for new orders showed growth, increasing from 5.8 to 9.4. Shipments were in the positive range but fell two points to 14.8. Input prices remained steady with almost no change in prices received.

The employment index registered its highest reading in five months, moving up 5 points to 10.2. Firms also reported a slight increase in the workweek.

The index for future growth rose 1 point in September along with future shipments that increased 4 points. Future new orders slipped 2 points to 44.4. The future employment index fell 4 points to 17.9.

Commenting on survey results, the Philadelphia Fed wrote, “The Manufacturing Business Outlook Survey suggests diminished general activity in September, although firms reported continued moderate growth in new orders and shipments. Employment also expanded moderately, suggesting firms are optimistic about a continuation of growth despite reported weakness in overall activity this month. The survey’s price indexes showed no signs of upward pressures his month. Indicators reflecting firms’ expectations for the next six months held steady or improved, suggesting expectations have not been notably diminished compared with previous months.”

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