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Economy in Brief

Philadelphia Fed Survey; Nonmanufacturing Business Conditions Deteriorate
by Tom Moeller  December 22, 2015

The Federal Reserve Bank of Philadelphia reported that its Index of Nonmanufacturing Sector Activity at the company level fell to 25.5 in December, the lowest level since August. The reading was well below the year-ago level of 47.5, and the full-year number of 31.5 was down from 39.1 in 2014. These diffusion indexes are not seasonally adjusted.

A lower inventory figure of 0.0 provided the largest drag on December activity. A shorter workweek and fewer capital expenditures also weighed on business.

Offsetting much of this reduction was improvement in new and unfilled orders Revenues and full-time permanent employment also improved along with pricing power.

Expected general activity at the company level in the region rose following declines in the prior two months. Overall expected activity deteriorated, however, to the lowest level since June 2013.

The 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.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, NSA) Dec Nov Oct Dec'14 2015 2014 2013
General Activity - Company 25.5 26.3 37.5 47.5 31.5 39.1 30.0
  New Orders 19.6 15.8 30.0 25.0 21.7 28.0 20.2
  Sales or Revenue 25.5 22.8 17.5 32.5 23.7 30.4 27.2
  Inventories 0.0 5.3 10.0 -2.5 5.2 5.8 3.0
  Number of Full-Time Permanent Employees 17.6 10.5 20.0 22.5 15.6 17.4 19.0
  Prices Paid 21.6 19.3 17.5 5.0 19.3 19.7 20.6
Expected General Activity - Company 52.9 50.9 52.5 70.0 54.3 69.4 47.8
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