Economy

Philadelphia Fed Reports Strong Manufacturing Growth in January

January 21, 2017

Manufacturing activity continued to improve in the Philadelphia area during January and is expected to continue to do so for the next six months, according to the latest Manufacturing Business Outlook Survey by the Federal Reserve Bank of Philadelphia.

The index for current manufacturing index rose from 19.7 in December to 23.6 in January for its sixth positive reading. Forty percent of those firms surveyed reported increased activity this month and the activity index reading was the highest since November 2014.

Survey results show new orders climbing and shipments sustaining a high reading, losing only one point in January. Longer delivery times and lead times were noted.

Firms reported hiring more workers in January as well as an increase in working hours.

Prices were higher for inputs this month and firms reported higher prices for goods manufactured as well. The prices received index jumped 19 points to its highest reading since July 2008.

The index for future general activity rose from a revised 48.7 in December to 56.6 in January, for its high reading since August 2014. Firms are expecting new orders and shipments to improve during the next six months. The indexes for future orders and shipments rose 6 and 12 points, respectively. The future employment diffusion index gained 14 points.

Survey respondents cited a moderate increase in underlying demand and 63 percent expect to increase production in the first quarter as opposed to 25 percent who expect a cut in production. Almost half (46 percent) of firms expect to meet additional production needs with current staff through increased productivity and/or hour worked, rather than by hiring new workers.