Philadelphia Fed Manufacturing Index Beat Forecast in January By Nearly 6X

Philadelphia Fed Survey Suggests Continued Growth for Next Six Months

The Philadelphia Fed’s Manufacturing Business Outlook Survey rose 15 points in January to 17, nearly six times the consensus forecast. Indicators for current activity, new orders, shipments, and employment were all positive and increased from December.

The survey’s future activity indexes remained at relatively high readings, suggesting continued optimism about growth for the next six months.

Forecasts for the headline diffusion index ranged from a low of -4.0 to a high of 5.0. The consensus forecast was only 3.0.

The percentage of the firms reporting increases (39%) was greater than the percentage reporting decreases (22%).

The current new orders index increased 7 points, and the shipments index increased 8 points.

Employment

The employment index increased 3 points to 19.3. Nearly 28% of manufacturing firms in the region reported higher employment, while 9% reported lower employment. The average workweek index remained positive but ticked down 3 points.

Future Optimism

The diffusion index for future general activity edged higher 4 points to 38.4 in January, from a revised reading of 34.8 in December.

More than 49% of the firms expect increases in activity over the next six months, while 11% expect declines. The future new orders and shipments indexes also increased, by 8 points and 4 points, respectively.

While the future employment index fell 3 points, one-third of firms still expect higher employment over the next six months.

Manufacturing firms in the region were also more optimistic about future capital spending: The future capital expenditures index rose 7 points, with 39% expecting higher capital spending over the next six months.