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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Conditions Ease
by Tom Moeller  March 21, 2017

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions in March fell to 32.5 from 38.0 during February. Despite the monthly decline, the index improved versus the averages for 2016 and 2015. Forty-nine percent of respondents reported an increase in current activity, while sixteen reported less. The expectations index at the company level for March declined to 53.8, a three-month low.

The new orders index eased for a second month, but remained up y/y. The sales/revenues index similarly declined, but was roughly stable y/y. The inventories index eased for a third straight month. On the employment front, the index of full-time permanent employees improved following the February decline, while the index for part-time or temporary employment similarly gained m/m. Wage & benefit cost gains plummeted to the lowest level in twelve months. The average employee workweek index held roughly steady following the prior month's decline. The capital expenditures reading on physical plant as well as equipment & software both weakened sharply.

The index for prices paid improved slightly. The index of prices received fell further below zero, negative for the second time since 2012.

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) Mar Feb Jan Mar'16 2016 2015 2014
General Activity - Company 32.5 38.0 33.3 18.2 19.7 31.3 38.7
  New Orders 22.6 25.3 28.9 18.3 15.6 21.7 27.9
  Sales or Revenue 20.3 32.5 43.5 19.3 16.1 23.6 30.2
  Inventories 4.6 5.7 10.4 7.6 4.4 5.2 5.8
  Number of Full-Time Permanent Employees 17.2 12.4 19.5 8.4 11.7 15.5 17.3
  Prices Paid 18.0 15.3 29.5 8.4 17.5 19.2 19.7
Expected General Activity - Company 53.8 57.5 68.3 45.4 36.1 53.8 59.9
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