U.S. Philadelphia Fed Factory Index Holds Steady in June; Price Reading Declines

The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia, held steady in June at -4.0, though that was increased from a larger rate of decline in May when the index stood at -26.4. The survey covers the third Federal Reserve District. A reading of 0.0 for June had been expected in the Action Economics Forecast Survey. A higher 24.5% (NSA) of firms reported increases in general activity in June, while an increased 28.4% reported decreases reported declines. Responses to this month's survey were collected from June 9 to June 16.

Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology along the lines of the national ISM index. The index rose to 51.4 in June from 50.7 in May.

In the latest survey, the new orders index fell to 2.3 in June after falling sharply to 7.5 in May. Twenty six percent (NSA) of respondents reported higher new orders while 23.8% reported declines. The shipments index rose to 8.3 after falling to -13.0 as 28.4% of respondents reported higher shipments and 20.0% indicated declines. The unfilled orders measure rose to 9.3 from 4.9, its highest level since January. The delivery times index rose to -13.6 after falling to -9.2 in May. Meanwhile, the inventories index fell to 3.6 in June, as 16.1% of respondents reported as increases and 12.5% reported decline.

The employment index declined to -9.8 after rising to 16.5 in May. It was the lowest level since May 2020. Eleven percent of respondents reported increases in employment in June while 20.3% reported declines. The average workweek index fell to 1.6 in last month after rising to 2.0 in May. Ten percent of respondents reported longer hours while 12.0% reported a decline.

Inflation measures eased in June. The prices paid index declined to 41.4 after surging to a three-year high of 59.8 in May. A lessened 41.4% of respondents reported increases in input prices in June while no respondents reported a decline. The prices received index fell to 29.5 after surging to 43.6 in May. A lessened 32.2% of respondents reported increases in prices received while only 2.6% reported declines.

The Future Activity Index over the next six months declined sharply to 18.3 in June after surging to 47.2 in May. A lessened 45.1% of respondents expected an increase in activity while an increased 26.8% expected a decline. Component declines were mixed including new orders & shipments which roughly halved and the hours worked and inventory index which fell. To the upside, the employment index rose slightly after surging in May. The unfilled orders & delivery tines readings also strengthened. The future prices paid index rose to the highest level since January 2022 and the expected prices received reading edged higher.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The series from the survey dating back to May 1968 can be found in Haver's SURVEYS database. The expectations forecast figures are from the Action Economics Forecast Survey in AS1REPNA.