May 2019 Philly Fed Manufacturing Survey Weakened

The Philly Fed Business Outlook Survey significantly declined and barely remained in expansion. Key elements remained in positive territory.

Analyst Opinion of the Philly Fed Business Outlook Survey

Although the survey index significantly declined, the key element sales declined relatively slightly while unfilled orders improved. Overall, I do not consider this survey much different than last month.

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 +16.6 to +0.3. Positive numbers indicate market expansion, negative numbers indicate contraction. The market expected (from Econoday) 5.8 to 11.0 (consensus +9.3).

Manufacturing conditions in the region weakened this month, according to firms responding to the June Manufacturing Business Outlook Survey. The current activity index declined to a reading just above zero this month. The survey's indexes for new orders, shipments, and employment remained positive but also declined from their May readings. Most of the survey's future activity indexes improved but continue to reflect muted optimism for the remainder of the year.

Current Indicators Suggest Moderating Growth

The diffusion index for current general activity decreased from 16.6 in May to 0.3 this month. This is the lowest reading since February, when the index fell below zero for one month (see Chart 1). The indexes for current shipments and new orders also declined this month: The current new orders index decreased 3 points, while the shipments index fell 11 points.


Econintersect believes the important elements of this survey are new orders and unfilled orders. New orders again declined but remains in expansion whilst unfilled orders modestly improved and is in expansion.


This index has many false recession warnings.

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