Haver Analytics
Haver Analytics
| Apr 18 2024

Philadelphia Fed Manufacturing Index Surges in April

  • Composite index moves to highest level in two years as new orders & shipments strengthen.
  • Prices paid measure jumps; prices received increases as well.
  • Expectations ease slightly but remain positive.

The Federal Reserve Bank of Philadelphia reported in its April survey of manufacturing activity that the Current Activity Diffusion Index jumped to 15.5 this month from 3.2 in March and 5.2 in February. An index reading of 0.9 had been expected in the Action Economics Forecast Survey. The Philly Fed survey responses were collected from April 8 to April 15.

The ISM-Adjusted Composite Index, calculated by Haver Analytics from the survey results, improved to 49.8 this month from 48.0 in March. It was the highest level since August 2022, but remaining below 50, it still suggests a net contraction in activity. It compared to a March 2023 low of 39.6.

Changes in the individual series were mixed this month. New orders surged to 12.2 from 5.4 in March. An improved 32.5% of respondents reported an increase in new orders while a lessened 20.3% reported a decline. The shipments index rose to 19.1 from 11.4, as a higher 36.5% reported increased shipments and a steady 17.4% reported declines. The delivery time reading rose to -9.4 from -16.7 as 10.0% reported faster delivery speeds, while 19.4% reported slower speeds.

Working lower, the unfilled orders measure eased to 0.8 in April from 1.0 in March. A lessened 13.6% reported an increase in order backlogs while 12.8% reported a decline. The inventories reading dropped to -8.9 from 4.4, negative for the sixth month in the last seven.

Job market conditions deteriorated this month as indicated by an employment reading which fell to -10.7 from -9.6 in March. Six percent of respondents reported more hiring while 16.4% reported less. Also weakening, the average workweek figure declined to -18.7 from -0.2.

The index of prices paid surged this month to 23.0 after a March decline to 3.7. This reflected 25.9% of respondents reporting increased prices and 2.8% reporting a decline. The prices received index improved to 5.5 from 4.6 and remained up from a low of -2.7 in May of last year. A steady 11.6% of respondents reported price increases and a lessened 6.2% reported declines.

Expectations for business conditions in the next six months deteriorated slightly with the April reading of 34.3 down from 38.6 in April. It remained up, however, from -4.0 in January. Expected shipments & new orders eased but employment expectations rose to the highest level in nine months. The expected workweek reading surged to the highest level since October 2021. Expectations for prices paid also strengthened to the highest level since June 2022. The prices received index eased, however, after strengthening in April.

The diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The Philadelphia Fed data can be found in Haver's SURVEYS database. The expectations forecast figures are from the Action Economics Forecast Survey in AS1REPNA.

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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