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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Index Continues to Strengthen
by Tom Moeller  January 24, 2017

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions in January rose to 33.3 from 26.1 during December, revised from 30.4. It was the highest level since October 2015. Forty-nine percent of respondents reported an increase in current activity, also the most in 15 months. The expectations index for January improved to 68.3, while expectations for regional activity also improved sharply.

Virtually all all of the index components improved. The new orders index jumped to the highest level since February2015 with 40% of respondents reporting an increase. Sales/revenues similarly improved to the highest level since February 2015. On the employment front, the index of full-time permanent employees improved to the highest point since October of 2015, but the index for part-time or temporary employment weakened. The average employee workweek jumped to the highest point since January 2014.  Capital expenditures on physical plant strengthened to a record high while the equipment & software reading also surged.

The index for prices paid neared a two-year high. The index of prices received also jumped, and wage & benefit costs similarly surged.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) Jan Dec Nov Jan'16 2016 2015 2014
General Activity - Company 33.3 26.1 16.8 18.5 19.7 31.3 38.7
  New Orders 28.9 20.2 13.6 16.0 15.6 21.7 27.9
  Sales or Revenue 43.5 20.4 16.3 16.0 16.1 23.6 30.2
  Inventories 10.4 11.2 6.2 2.6 4.4 5.2 5.8
  Number of Full-Time Permanent Employees 19.5 16.7 12.2 12.2 11.7 15.5 17.3
  Prices Paid 29.5 18.1 16.3 17.5 17.5 19.2 19.7
Expected General Activity - Company 68.3 61.6 39.5 26.9 42.9 53.8 59.9
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