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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Conditions Slip Again
by Tom Moeller  November 21, 2017

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions at the company level declined to 16.4 in November from 24.7 during October. It was the third straight monthly decline and left the index down versus the February high of 38.0. Thirty-nine percent of respondents reported an increase in current activity while 22% reported a decline. The expectations index at the company level for November improved to 42.8, but remained down from 68.3 in January.

Sales or revenue fell to the lowest level since October of last year. Unfilled orders similarly declined, but new orders improved modestly. The number of full-time permanent employees surged to the strongest level since April. The index of part-time/temporary employment eased m/m and was fairly steady y/y. The average workweek reading improved slightly. Capital expenditures on facilities slipped, while spending on equipment and software reversed its October rise.

The index of prices paid fell slightly m/m but remained up sharply y/y. Twenty-five percent of respondents paid higher prices while two percent paid less. The prices received index declined sharply m/m and y/y, while the wages and benefits index strengthened.

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) Nov Oct Sept Nov'16 2016 2015 2014
General Activity - Company 16.4 24.7 25.7 16.8 19.7 31.3 38.7
  New Orders 16.5 11.4 26.7 13.6 15.6 21.7 27.9
  Sales or Revenue 15.8 25.5 29.3 16.3 16.1 23.6 30.2
  Inventories 3.9 0.6 -3.4 6.2 4.4 5.2 5.8
  Number of Full-Time Permanent Employees 21.5 17.3 3.8 12.2 11.7 15.5 17.3
  Prices Paid 23.2 28.3 14.9 16.3 17.5 19.2 19.7
  Wage & Benefit Costs 43.4 40.1 34.0 27.3 31.2 32.5 33.1
Expected General Activity - Company 42.8 38.0 49.3 39.5 42.9 53.8 59.9
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