Manufacturing Business Outlook Survey for Mid-Atlantic Region Beats Forecast

The Philadelphia Federal Reserve’s Mid-Atlantic manufacturing survey rose 5 points to a very strong 23.8, making September another month of enormous strength. The Manufacturing Business Outlook Survey, which was forecast to come in at 18.0, has now shown 14 consecutive months of growth.

The indexes for general activity, new orders, and shipments increased this month, and employment remained positive. Firms also reported renewed price pressures this month and backlog orders are showing the largest build in 25 years.

Current Indicators

Nearly 39% of the firms responding to the survey indicated increased factory activity this month, while just 15% reported decreased activity. The new orders and shipments indexes also gained, by 9 points and 8 points, respectively.

Both the unfilled orders and delivery times indexes were positive for the 11th consecutive month, which indicates longer delivery times and an increase in unfilled orders. The percentage of firms reporting an increase in employment (18%) was greater than the percentage reporting a decrease (12%). While the current employment index fell 4 points it has remained positive for 10 consecutive months.

Firms forecast an acceleration of production growth for the upcoming fourth quarter, and firms’ overall forecast for the next six months showed further improvement.

Six-Month Indexes

The diffusion index for future general activity shot up from 42.3 in August to 55.2 in September, marking the third consecutive month of gains. It is now at its highest reading since March.

The indexes for future new orders and shipments also showed improvement, gaining 8 points and 12 points, respectively. Even though firms remained optimistic about increases in employment over the next 6 months, the future employment diffusion index fell 3 points. Thirty-six percent (36%) of the firms expect increases in employment and only 6% expect decreases.

The future capital spending index remained at a high level, with almost 44% of the firms expecting capital spending increases over the next 6 months.