Haver Analytics
Haver Analytics
| Nov 16 2023

U.S. Philly Fed Manufacturing Index Remains in Negative Territory in November

  • The headline index increased by 3.1 points but remained negative.
  • It has been in negative territory for 16 of the past 18 months.
  • The new orders sub-index fell but remained positive while the shipments sub-index collapsed into negative territory.

The Philadelphia Federal Reserve Bank reported that overall manufacturing activity in the region continued to decline in November. While the general activity diffusion index increased by 3.1 points, it remained negative at -5.9 in November versus -9.0 in October. A reading of -10.0 had been expected by the Action Economics Forecast Survey. The index has been negative in 16 of the past 18 months. Nearly 18% of the firms reported decreases in general activity this month (down from 35% last month), while 12% reported increases (down from 26%); 70% reported no change (up from 38% last month). Survey responses were collected from November 6 to November 13.

The headline activity index reflects the answer to a single question. Haver Analytics calculates an ISM-adjusted general business conditions index from five key components using the same methodology as the national ISM index. This calculated index fell to 46.4 in November from 48.8 in October, remaining below the 50 expansion/contraction mark for the fifteenth consecutive month.

On balance, the performance of the sub-indices remained negative during November with four of the five key sub-indexes posting negative readings. The index of new orders was the only one of the key five to post a positive reading though it fell more than three points to 1.3. The shipments sub-index plunged to -17.9, its lowest reading since March, from 10.8 in October. Unfilled orders rose seven points but to a still anemic -9.8 in November. Delivery times increase to -8.7 from -21.4 in October, the fifteenth consecutive month below zero. Inventories also rose marginally while remaining negative at -3.1 versus -7.0 in October.

Employment indicators were mixed. The number of employees sub-index remained positive for the second consecutive month though it fell to a very anemic 0.8 in November from 4.0 in the previous month. Similar shares of the firms reported increases (16%) and decreases (15%) in employment with most firms (68%) reporting steady employment levels. By contrast, the average workweek sub-index fell deeper into negative territory, posting its third consecutive monthly decline to -11.4 in November, its lowest reading since March.

Firms continue to report price increases overall. The prices paid diffusion index declined from 23.1 in October to 14.8 in November. Almost 21% of the firms reported increases in input prices versus the 6% reporting decreases; 72% reported no change in prices paid. The current prices received index was little changed at 14.8. Twenty-one percent of the firms reported increases in prices received for their own goods this month, 6% reported decreases, and 7% reported no change.

Firms also turned more pessimistic concerning future conditions with the index of conditions expected in six months falling to -2.1 in November from 9.2 in October. This was the first negative reading since May. The share of firms expecting decreases in activity over the next six months (30%) narrowly exceeded the share expecting increases (28%) with 38% expecting no change. New orders are expected to slow while shipments are expected to pick up. Importantly, capital expenditures are expected to decline.

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.

  • Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia.   Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan.   In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association.   Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.  

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