The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed's National Activity Index.

The latest Manufacturing Index came in at 31.5, down 18.7 from last month's 50.2. The 3-month moving average came in at 42.1, up from 38.7 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 52.7, down 13.9 from the previous month's 66.6.

The 31.5 headline number came in below the 43 forecast at Investing.com.

Here is the introduction from the survey:

Manufacturing activity in the region continued to grow, according to the firms responding to the May Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments declined from April’s readings but remained elevated. Additionally, employment increases were less widespread this month, while both price indexes reached long-term highs. Most future indexes moderated this month but continue to indicate that the firms expect growth over the next six months. (Full Report)

The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011, 2012, and 2015, and a shallower contraction in 2013. The contraction due to COVID-19 is clear in 2020.

In the next chart, we see the complete series, which dates from May 1960. For proof of the high volatility of the headline indicator, note that the average absolute monthly change across this data series is 7.9.

The next chart is an overlay of the General Activity Index and the Future General Activity Index — the outlook six months ahead.

For comparison, here is the latest ISM Manufacturing survey.

Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.