The Philadelphia Fed July 2022 Manufacturing Business Outlook Survey took a steep plunge into negative territory. 

• The diffusion index for current general activity decreased for the fourth consecutive month, falling 9 points to -12.3 in July. 
• Most firms reported no change in activity (61 percent), the share of firms reporting decreases (24 percent) exceeded the share of firms reporting increases (12 percent). 
• The index for new orders declined for the second consecutive month, from -12.4 to -24.8.
• Current shipments index rose from 10.8 to 14.8. 
• The indexes for current inventories and unfilled orders were negative, at -9.3 and -10.4, respectively.

The increase in shipments relative to new order is not a positive thing. Back orders are being filled, but new orders are in steep decline. Layoffs will result.

Expectations 

• The diffusion index for future general activity decreased 12 points to -18.6, its lowest reading since December 1979 
• More than 35 percent of the firms expect decreases in future activity (down from 42 percent last month), compared with 17 percent that expect increases (down from 36 percent).
•  The future new orders index declined 5 points to -12.4, while the future shipments index rose 9 points to 12.8. 
• The future employment index rose 6 points to 16.5. Nearly 56 percent of the firms expect steady employment levels over the next six months, 29 percent of the firms expect to increase employment, and 13 percent expect employment declines. 
• The future capital expenditures index fell 7 points to 4.4, its lowest reading since March 2013, as 81 percent of the firms expect no change in spending over the next six months and only 10 percent expect increases.

Prices Received vs Prices Paid

Price inflation has peaked. But the wide discrepancy between prices paid and received suggests falling profits and falling "real" inflation-adjusted output.

Philly Fed Special Questions

Employment Synopsis 

• Employment costs rising
• Nearly 56 percent of the firms expect steady employment levels over the next six months, 29 percent of the firms expect to increase employment, and 13 percent expect employment declines. 

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