Philadelphia Fed Manufacturing Business Outlook Survey Beats Forecast

The Philadelphia Fed Manufacturing Business Outlook Survey rose 5 points to 10.4 in November, indicating factory activity in the region was stronger than expected.

The percentage (30%) of firms reporting an increase in activity exceeded the percentage (20%) reporting a decrease.

Forecasts ranged from a low of 3.0 to a high of 8.7. The consensus forecast was only 7.0.

Employment Gains at Slower Pace

While regional manufacturing firms reported an overall increase in employment this month, the current employment index fell 11 points to a still positive 21.5. Nearly 27% of the firms reported an increase in employment, down from 34% last month.

Over 5% of the firms reported decreases in employment this month, while 68% reported no change. The average workweek index also decreased but remained positive.

Regional Firms Remain Optimistic

The diffusion index for future general activity rose 2 points to 35.8 after increasing 13 points in October (see Chart). Nearly 52% of the firms expect increases in activity over the next six months, while 16% expect declines. The future new orders index held steady, while the future shipments index decreased 2 points.

The future employment index rose 2 points from the previous month, as firms remained optimistic about future hiring: Thirty-seven percent (37%) of the firms expect higher employment over the next six months.

However, firms were less optimistic about future capital spending. The index fell 17 points to its lowest reading in three years.