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Philadelphia Fed Survey: Headline good, details tenuous

August 18, 2016

Bottom Line: Manufacturing activity of mid-Atlantic based businesses expanded tenuously for only the 3rd time in the last 12 months. Details of the report were much weaker than the headline number, -5.6% on an ISM-weighted basis with both unfilled and new orders falling sharply. In light of the weaker Empire Manufacturing data on Monday, this portends weakness for the national ISM on September 1st - but more regional reports are due in the coming weeks.

The Philadelphia Fed Index ROSE by 4.9 points in August to 2.0%, in-line with market expectations. However, on an ISM-weighted basis, the index deteriorated sharply, indicating that the details were negative than the headline figure. New Orders decreased sharply by -7.2%. Unfilled Orders fell sharply while Inventories dropped.

Employment decreased sharply by -20.0%, a sharp decline after moving lower for 8 months. This portends weaker factory job creation in the upcoming August payroll employment report. Prices Paid accelerated sharply; but/and they are rising moderately. The 6-Month Outlook improved as business executives were more optimistic about the factory sector's prospects.

Article by contingentmacro