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Economy in Brief

Philadelphia Fed Nonmanufacturing Readings Deteriorate
by Tom Moeller  July 21, 2015

The Philadelphia Federal Reserve reported that its Index of Nonmanufacturing Sector Activity fell sharply to 8.1 this month from an unrevised 54.1 in June. These figures are not seasonally adjusted. Since inception in 2011, July readings have deteriorated sharply from June. Sales, however, deteriorated to a record extent followed by a sharp deterioration in new orders, unfilled orders and inventories.

The rate of full-time hiring declined sharply to the lowest level since February of last year. The degree of m/m deterioration, however, has not been common for July. A separate measure of part-time hiring deteriorated to an unusually large extent. The length of the average workweek similarly weakened. Finally, capital spending activity declined, notably for equipment & software, to the weakest level since January of last year.

Pricing power eased considerably m/m and y/y, but a firming trend for prices paid remained intact. Prices received, however, deteriorated markedly. Strength in wages and benefits lessened considerably, as can happen in July.

The outlook for business activity in the region has been optimistic for the last two years. Optimism at the company level, however, deteriorated sharply this month.

Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. The data is available in Haver's SURVEYS database.

Assessing the Recent Behavior of Inflation from the Federal Reserve Bank of San Francisco is available here.

Philadelphia Fed Nonmanufacturing Business Outlook Survey (NSA) Jul Jun May Jul'14 2014 2013 2012
General Activity - Region 8.1 54.1 54.5 34.1 35.9 25.2 22.5
  New Orders -5.4 27.0 27.3 29.5 28.0 20.2 20.2
  Sales or Revenue -21.6 32.4 43.2 40.9 30.4 27.2 19.4
  Number of Full-Time Permanent Employees 5.4 24.3 13.6 31.8 17.4 19.0 12.7
  Prices Paid 18.9 35.1 11.4 25.0 19.7 20.6 20.7
Expected General Activity - Region 81.1 81.1 79.5 84.1 83.6 80.9 73.3
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