Philadelphia Fed Nonmanufacturing Survey Indicates Activity Improvement

The Philadelphia Federal Reserve reported that its Index of Nonmanufacturing Sector Activity gained to 46.9 this month from 8.8 in January. Its improvement versus last February, when the region was socked in by heavy snowfall, is not surprising. Sales gained substantially during the last eight months and were vastly improved versus last year. New orders activity also improved y/y as it has during the last four months. The index is not seasonally adjusted.

Employment has shown less sensitivity to the weather. The rate of full-time hiring remained fairly steady during the last several months, although there was substantial improvement versus last year. A separate measure of part-time hiring also improved significantly. The length of the average workweek improved both month-to-month and year-to-year, reversing deterioration during January. Finally, capital spending activity has been moving sideways.

Pricing power indicated modest improvement both m/m and y/y. That was accompanied by notable improvement in wages and benefits.

The outlook for business activity has been steadily optimistic since the beginning of last year, both at the regional as well as the company level.

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.