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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Conditions Improve Slightly
by Tom Moeller  June 20, 2017

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions in June rose to 28.0 from 25.8 during May. The index remained down, however, versus the February high of 38.0. Forty-one percent of respondents reported an increase in current activity while thirteen reported less. The expectations index at the company level for June declined to 48.3, down from 68.3 in January.

The new orders index improved m/m, but remained below its April level. Sales or revenue showed greater m/m gain, but also remained below January. Unfilled orders and inventories exhibited improvement. The number of full-time permanent employees rebounded from its May decline, and has been trending higher since last July. The index of part-time/temporary employment added to the prior month's decline. The average workweek reading rose slightly. Capital expenditures on plant as well as equipment declined.

The index of prices paid dropped sharply to the lowest level since December 2014. Fourteen percent of respondents paid higher prices and six percent paid less. The prices received index eased slightly while the wages and benefits index fell sharply. 

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) Jun May Apr Jun'16 2016 2015 2014
General Activity - Company 28.0 25.8 34.9 19.9 19.7 31.3 38.7
  New Orders 19.7 15.0 33.5 11.1 15.6 21.7 27.9
  Sales or Revenue 37.8 25.5 34.7 15.0 16.1 23.6 30.2
  Inventories 8.0 -1.9 7.1 1.1 4.4 5.2 5.8
  Number of Full-Time Permanent Employees 19.7 9.3 26.4 17.3 11.7 15.5 17.3
  Prices Paid 7.9 16.6 31.6 24.3 17.5 19.2 19.7
Expected General Activity - Company 48.3 49.9 59.1 38.4 42.9 53.8 59.9
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