December 2018 Philly Fed Manufacturing Survey Again Declined

The Philly Fed Business Outlook Survey declined but remains in expansion. Key elements improved.

Analyst Opinion of the Philly Fed Business Outlook Survey

Consider this a stronger report than last month as key elements improved.

This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the more negative of all the Fed manufacturing surveys but has been more positive than the others recently.

The index moved from +12.9 to +9.4. Positive numbers indicate market expansion, negative numbers indicate contraction. The market expected (from Econoday) 11.2 to 22.0 (consensus +17.5).

Manufacturing activity in the region continued to grow but remained subdued, according to results from the December Manufacturing Business Outlook Survey. The survey's broad indicators were positive, but their movements were mixed this month: The general activity and shipments indicators fell from their readings last month, while the indicators for new orders and employment increased. The firms remained generally optimistic about future growth.

Current Indicators Remained Muted

The diffusion index for current general activity decreased from 12.9 in November to 9.4 this month, its lowest reading since August 2016 (see Chart 1). Over 26 percent of the manufacturers reported increases in overall activity this month, while 17 percent reported decreases. The new orders index increased 5 points to 14.5 but remains notably lower than its average reading for the year. The current shipments index decreased 12 points to 10.0, its lowest reading in 27 months. Both the unfilled orders and delivery times indexes were positive this month, suggesting higher unfilled orders and slower delivery times.


Econintersect believes the important elements of this survey are new orders and unfilled orders. New orders significantly declined but remains in expansion whilst unfilled orders modestly significantly declined and remained in contraction.

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