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Economy in Brief

Philadelphia Fed Index of Nonmanufacturing Business Activity Moves Sideways; Prices Surge
by Tom Moeller  June 21, 2016

For a third month, the Federal Reserve Bank of Philadelphia reported that its Index of Nonmanufacturing Sector Activity at the company level was fairly steady. The index level of 17.6 compared to 18.2 in May and 17.8 in April, each little changed following a decline to 17.5 in March. The measure has been declining since early last year. The expectations index for general activity also deteriorated to the lowest level since February. These diffusion indexes are seasonally adjusted.

Weakness in the overall reading was led by a lower new orders component, which was the weakest since last July. The inventories series also fell sharply showing little accumulation after robust readings in the prior three months. Order backlogs also expanded at a greatly reduced rate and shipments growth eased.

Countering these deteriorations was improvement in hiring, where the full-time permanent employee index rose to its highest level since October. That was accompanied by a decline in the part-time employment series. The wage & benefit cost index remained steady after strengthening in April.

The index of prices paid surged to the highest level in 12 months. Thirty percent of respondents reported higher prices paid while four percent paid less. The index of prices received rose slightly m/m.

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.

Semiannual Monetary Report to the Congress by Federal Reserve Chair Janet L. Yellen is available here.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) Jun May Apr Jun'15 2015 2014 2013
General Activity - Company 17.6 18.2 17.8 45.3 31.4 38.8 29.8
  New Orders 9.4 23.1 13.9 22.0 21.7 27.9 20.2
  Sales or Revenue 15.0 23.6 9.6 26.7 23.6 30.2 27.0
  Inventories 0.6 8.9 6.5 4.0 5.2 5.8 3.0
  Number of Full-Time Permanent Employees 18.3 10.6 7.5 25.5 15.6 17.3 18.8
  Prices Paid 25.7 22.4 10.9 32.3 19.3 19.7 20.6
Expected General Activity - Company 36.7 39.1 56.0 56.5 54.0 60.1 47.4
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