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Philly Fed Survey: Continued Expansion, Sharp Rise in New Orders

October 20, 2016

Bottom Line: Manufacturing activity of mid-Atlantic based businesses expanded for the 5th time in the last 12 months. This was stronger than Empire State Manufacturing Survey, 6.6% vs. -9.6% on a ISM weighted basis. New Orders were sharply higher, reaching levels not seen since November, 2014. Relative to inventories, new orders were at their best level in 6 months. Overall this suggests that the national ISM Manufacturing Survey, to be reported on November 1, should remain over the 50 breakeven level.

The Philadelphia Fed Index FELL by 3.1 points in October to 9.7%, compared with market expectations for 5.0%. This indicates that manufacturing activity in the mid-Atlantic region still expanded in the last month. On an ISM-weighted basis, the index increased sharply, indicating that the details were positive compared to the headline figure.

New Orders increased sharply by 16.3%. Shipments increased by 15.3%.
Unfilled Orders fell slightly while Inventories dropped.

Employment decreased moderately by -4.0%. This portends weaker factory job creation in the upcoming October payroll employment report. Prices Paid decelerated sharply. The 6-Month Outlook deteriorated.

Article by Contingent Macro Advisors