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Philly Fed Survey: Continued Expansion, New Orders Remain Robust

November 17, 2016

Bottom Line: Manufacturing activity of mid-Atlantic based businesses expanded for the 6th time in the last 12 months. This was stronger than Empire State Manufacturing Survey, 12.2% vs. -9.6% on a ISM weighted basis, it suggests that the early outlook for the national ISM Manufacturing Survey, to be reported on December 1, has a positive bias. New orders continued to rise steadily in the mid-Atlantic region, reaching their highest level since November 2014. Inventories rebounded, though, and purchasing managers' 6-month outlooks deteriorated again.

The Philadelphia Fed Index FELL by 2.1 points in November to 7.6%, compared with market expectations for 7.8%. This indicates that manufacturing activity in the mid-Atlantic region still expanded in the last month. On an ISM-weighted basis, the index increased moderately, indicating that the details were positive compared to the headline figure.

New Orders increased sharply by 18.6%. Shipments increased by 19.5%. Unfilled Orders rose moderately while Inventories climbed. Employment decreased modestly by -2.6%. This portends weaker factory job creation in the upcoming November payroll employment report.

Prices Paid accelerated sharply. The 6-Month Outlook deteriorated.

Article by Contingent Macro Advisors