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Philadelphia Fed

Philly Fed: Manufacturing Activity Contracted for the Fifth Straight Month in January

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The Federal Reserve Bank of Philadelphia said that manufacturing activity contracted for the fifth straight month in January. The composite index of general business activity rose from -10.2 in December to -3.5 in January, and yet, the headline figure has now been in negative territory since September. (Note that prior data reflect an annual revision for seasonal adjustments.) The underlying data were mixed. The pace of decline for new orders (up from -11.1 to -1.4) slowed in this latest report. In contrast, labor market data worsened for the month, including hiring (down from 2.2 to -1.9) and the average workweek (down from 0.6 to -2.2). On the positive side, shipments (up from -2.1 to 9.6) picked up at a decent rate, expanding after three consecutive months of declines. Read More

Philly Fed: Manufacturing Activity Returned to Negative Territory in December

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The Federal Reserve Bank of Philadelphia said that manufacturing activity returned to negative territory in December, contracting for third time in the past four months. The composite index of general business activity declined from 1.9 in November to -5.9 in December. The decrease in the headline number was led lower by a worsening in new orders (down from -3.7 to -9.5). The percentage of respondents suggesting that sales had increased for the month dropped from 25.8 percent to 22.4 percent, with those noting decreasing orders up from 29.5 percent to 31.9 percent. This suggests that manufacturers in the Philly Fed region remain quite anxious about demand given global challenges and falling commodity prices, mirroring concerns seen nationally. Read More

Philly Fed: Manufacturing Activity Rebounded Slightly in November

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The Federal Reserve Bank of Philadelphia said that manufacturing activity rebounded in November after contracting in the prior two months. The composite index of general business activity improved from -4.5 in October to 1.9 in November. With that said, manufacturers in the district were not fully out of the woods yet, with several key indicators continuing to decrease on net. This included new orders (up from -10.6 to -3.7), shipments (up from -6.1 to -2.5) and the average workweek (down from -7.3 to -16.2). The good news there was that the pace of decline for new orders and shipments eased for the month – a fact trumpeted by the Philly Fed in the press release noting “slight improvement” in November. Hiring (up from -1.7 to 2.6) also picked up a little, even as three-quarters of responses noted no change in employment. Read More

Philly Fed: Manufacturing Activity Remained Weak in October

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The Federal Reserve Bank of Philadelphia said that growth in the manufacturing sector declined once again in October, extending the contraction seen in September. The composite index of general business activity improved slightly from -6.0 in September to -4.5 in October, but the data indicate further weakening of economic conditions overall in the district. Indeed, new orders (down from 9.4 to -10.6), shipments (down from 14.8 to -6.1) and hiring (down from 10.2 to -1.7) each shifted from modest growth to contracting levels of activity for the month. Thirty-six percent of those completing the survey said that new orders declined for them in October, with one-quarter citing increases and one-third noting no changes. Moreover, in a series of special questions, respondents noted that there continued to be a lot of “slack” in capacity, with an average utilization rate of 76.0 percent, down from 77.4 percent at this time last year. Read More

Philly Fed: Manufacturing Activity Expanded Modestly in August

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The Federal Reserve Bank of Philadelphia said that growth in the manufacturing sector in its district expanded modestly in August, picking up slightly from July. The composite index of general business activity increased from 5.7 in July to 8.3 in August. While this suggests some improvement for the month, growth in activity has decelerated since June’s 15.2 reading, which was the highest level so far in 2015. The headline figure rose primarily on strength in shipments (up from 4.4 to 16.7), with 36.0 percent of respondents suggesting that their shipments were higher in August, up from 23.5 percent in July. Similarly, hiring (up from -0.4 to 5.3) accelerated somewhat, with the percentage of those completing the survey saying that employment was increased up from 12.0 percent to 21.1 percent. The average workweek (up from 4.0 to 8.5) was also longer. Read More

Philly Fed: Growth in Manufacturing Activity Slowed Somewhat in July

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The Federal Reserve Bank of Philadelphia said that growth in the manufacturing sector in its district slowed somewhat in July. The composite index of general business activity decreased from 15.2 in June, its highest level so far in 2015, to 6.7 in July. This suggests some deceleration in the expansion rate, leading more respondents to indicate declines in several key underlying data points. For instance, the percentage of manufacturers suggesting that their new orders had decreased in the month rose from 19.7 percent in June to 24.7 percent in July. This corresponded to the percentage of respondents citing increased new orders dropping from 35.0 percent to 31.7 percent. As such, the new orders index dropped from 15.2 to 7.1 – a reading that suggests a modest expansion in demand in June, even as the growth rate eased from a more-robust pace in July. Read More

Monday Economic Report – June 22, 2015

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Here is the summary for this week’s Monday Economic Report: 

Last week, one media outlet reported that manufacturing has been in a “technical recession” for the past six months. I am more hesitant to use the R-word to describe the sector’s performance year-to-date, and in my view, this description somewhat overstates the significance of broader market trends, particularly for expectations moving forward. At the same time, manufacturing production has declined since late last year, as illustrated in the graphic below. A number of significant economic headwinds have reduced output in four of the past six months, reducing the year-over-year pace of growth in the sector from 4.5 percent in November to 1.8 percent in May. Capacity utilization has also declined for five consecutive months, down from 78.1 percent in December to 77.0 percent in May. Read More

Philly Fed: Manufacturing Activity Rose to Its Highest Level of 2015 So Far

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The Federal Reserve Bank of Philadelphia said that new orders and shipments rebounded in June, lifting its headline manufacturing index to its highest level of 2015 so far. The composite index of general business activity rose from 6.7 in May to 15.2 in June, with the indices for orders (up from 4.0 to 15.2) and shipments (up from 1.0 to 14.3) each up strongly. The key to each of these measures was a drop in the percent saying that activity was declining. For instance, the percentage of respondents suggesting that shipments had declined in the month fell from 28.5 percent in May to 16.0 percent in June. This indicates that manufacturing activity has stabilized from weaknesses earlier in the year, providing some encouragement moving forward. Read More

Monday Economic Report – May 26, 2015

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Here is the summary for this week’s Monday Economic Report:

The minutes of the April 28–29 Federal Open Market Committee (FOMC) meeting highlighted the nuance that many of us see in the economy right now. The Federal Reserve highlighted a number of challenges facing consumers and businesses in the early months of 2015, noting how these headwinds have dampened overall activity year-to-date. On the other hand, the FOMC felt that slowing economic growth was largely due to “transitory factors,” with its outlook mostly unchanged for the rest of this year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015, and it expects the unemployment rate to fall to 5.0 to 5.2 percent.   Read More

Philly Fed: Manufacturing Outlook Eased Slightly in May

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The Philadelphia Federal Reserve Bank said that the manufacturing outlook eased slightly in May. The composite index of general business activity dropped from 7.5 in April to 6.7 in May. In general, the outlook has weakened so far this year relative to last year, with the headline measure averaging 6.1 through the first five months of 2015. This compares to the more-robust average of 25.1 observed in the second half of 2014, with the softness experienced year-to-date largely the result of a number of headwinds seen in the U.S. and global economy. At the same time, manufacturers in the Philly Fed district have reported expanding levels of activity for 15 straight months. Read More