Recent Updates

  • UK: Lloyds TSB Business Barometer (Nov)
  • China: Steel PMI, Manufacturing PMI, Nonmanufacturing PMI (Nov)
  • New Zealand: ANZ Business Outlook Survey (Nov)
  • Australia: Assets & Liabilities of ADIS (Oct), External Debt, International Investment Position, BOP (Q3)
  • more updates...

Economy in Brief

Philadelphia Fed Manufacturing Index Strengthens in November
by Tom Moeller  November 18, 2021

• Component improvement is broad-based.

• Pricing power accelerates further.

• Expectations improve.

The Federal Reserve Bank of Philadelphia's Manufacturing Business Conditions Index surged in November to 39.0 from 23.8 in October. It was the highest reading since April, up from 19.4 in August. A reading of 23.0 had been expected by the Action Economics Forecast Survey. The percentage of firms reporting improving conditions rose to 41.8% this month from 40.3% in October while the share reporting weaker conditions dropped sharply to 2.8% from 16.5% in October. The share reporting no change rose 55.4% from 41.2%.

Haver Analytics calculates an ISM-Adjusted General Business Conditions Index using the same methodology as the national ISM index. The reading rose to a near-record 65.4 from 63.6 in October.

Performance of the subindexes was mostly positive. The new orders index surged to 47.4, just below the record reached in March 1973. The shipments index similarly strengthened to 47.4 from 30.8. The unfilled orders index jumped to 27.4, a six-month high. The delivery times index rose to 35.7, also a six-month high. Working lower was the inventory index to 13.5, a three-month low.

The employment index weakened to 27.2 month from 30.7 in October. A roughly steady 31.4% of respondents reported more hiring while 4.2% lowered employment. The average workweek reading rose to 30.6, a six-month high.

The index of prices paid surged to 80.0 in November from 70.3 in October. Eighty-two percent of respondents reported paying higher prices while 2.1% paid less. The index of prices received rose to a near-record 62.9 this month from 51.1 last month.

The Philadelphia Fed also surveys expectations for business activity in the coming six months. The expectations index for future activity index improved to 28.5 from 24.2 in October. The reading reached a high of 69.2 in June of this year. Expected new orders, shipments and employment rose but inventories & delivery times fell. The expected prices reading held fairly steady. The capital expenditures eased after an October rise.

The survey panel consists of 150 manufacturing companies in the third Federal Reserve District (which consists of southeastern Pennsylvania, southern New Jersey and Delaware). The diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease in activity. The ISM-adjusted figure, calculated by Haver Analytics, is the average of five diffusion indexes: new orders, shipments, employment, delivery times and inventories with equal weights (20% each). Each ISM-adjusted index is the sum of the percent responding "higher" and one-half of the percent responding "no change."

The figures from the Philadelphia Federal Reserve dating back to 1968 can be found in Haver's SURVEYS database. The expectation from the Action Economics Forecast Survey is available in AS1REPNA.

Philadelphia Fed - Manufacturing Business Outlook Survey (%, SA) Nov Oct Sep Nov'20 2020 2019 2018
General Factory Sector Business Conditions 39.0 23.8 30.7 26.3 7.9 9.9 20.9
ISM-Adjusted Business Conditions 65.4 63.6 59.4 60.1 52.3 55.5 57.7
  New Orders 47.4 30.8 15.9 37.9 8.9 14.1 21.0
  Shipments 32.1 30.0 29.9 24.9 9.7 16.9 22.8
  Unfilled Orders 27.4 12.7 5.4 22.2 0.4 7.7 7.0
  Delivery Time  35.7 32.2 20.4 18.0 5.1 9.4 9.5
  Inventories  13.5 18.8 19.2  1.8 -0.2 5.1 7.2
  Number of Employees 27.2 30.7 26.3 27.2 5.0 16.9 21.5
  Average Workweek 30.6 27.8 29.3 25.7 4.4 9.8 15.9
  Prices Paid 80.0 70.3 67.3 38.9 16.6 19.7 46.1
Expectations - General Business Conditions; Six Months Ahead 28.5 24.2 20.0 44.3 46.3 28.4 36.8
close
large image