Philadelphia Fed Nonmanufacturing Business Activity Growth Eases

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions at the company level declined to 27.6 in March from 32.1 during February. It was the lowest index level since December. Forty-one percent of respondents reported an increase in current activity while 14% reported a decline.

The expectations index at the company level for March fell to 54.1 from 58.5, but remained up from the low of 41.7 during October.

The sales or revenue index declined to the lowest level since November. Conversely, new orders jumped to the highest level since February 2015. The unfilled orders index reversed most of the strength exhibited during February, as inventories barely accumulated.

On the labor front, the number of full-time permanent employees index jumped to the highest level since April of last year, and the index of part-time/temporary employment also strengthened. The average workweek reading surged to the highest level since October 2014. The wages & benefits reading advanced to the highest point since October and was up sharply from the 2017 average.

The index for capital spending on equipment and software surged to the highest level since March 2012. The capital expenditures for facilities index rose modestly, but remained depressed versus last year.

The index of prices paid strengthened to the highest level since September 2013. A greatly increased 37% of respondents paid higher prices while none paid less. The prices received index also increased to the highest level April of last year.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.