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Economy in Brief

Philadelphia Fed Index of Nonmanufacturing Business Is Steady; Expectations Sag
by Tom Moeller  October 25, 2016

The Federal Reserve Bank of Philadelphia reported that its October Index of Nonmanufacturing Sector Activity at the company level was little changed at 16.3, the lowest level since July 2015. It remained down sharply versus 53.9 in February 2015. The expectations index for general activity at the company level fell back to 40.4, its lowest level since June. These diffusion indexes are seasonally adjusted.

Declines in the component readings were broad-based. Lower new orders and lower shipments, as well as a weaker full-time employment index and hours-worked, prompted the deterioration in this month's figure. The part-time employment reading remained depressed. Wage & benefit costs rebounded to the highest level since October 2014. Capital expenditures on equipment and software increased after a sharp September decline.

The prices paid series reversed most of its improvement last month.

Regional general activity eased to the lowest point since June. Expectations for the region were down slightly following strength earlier this year.

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.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) Oct Sep Aug Oct'15 2015 2014 2013
General Activity - Company 16.3 16.7 19.5 35.6 31.4 38.8 29.8
  New Orders 5.7 10.6 14.7 24.2 21.7 27.9 20.2
  Sales or Revenue 6.0 11.1 22.5 17.9 23.6 30.2 27.0
  Inventories 7.6 -1.1 -4.2 6.9 5.2 5.8 3.0
  Number of Full-Time Permanent Employees 8.5 19.3 10.0 23.1 15.6 17.3 18.8
  Prices Paid 15.0 29.9 10.6 17.1 19.3 19.7 20.6
Expected General Activity - Company 40.4 52.7 43.7 56.8 54.0 60.1 47.4
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