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Philly Fed Survey: Highest Reading in 20+ Years

February 16, 2017

Bottom Line: The Philadelphia Fed's survey mid-Atlantic manufacturers rocketed higher in February, suggesting sharply stronger activity, led by growth in new orders with 44% of firms reporting increases and just 6% reporting declines. This was stronger than Empire State Manufacturing Survey, 20.9% vs. 0.5% on a ISM weighted basis and suggests a strong upward bias for the national survey The only hint of weakness came in a slightly lower reading for 6-month outlooks, just as we saw with the Empire survey earlier in the week.

The Philadelphia Fed Index ROSE by 19.7 points in February to 43.3%, compared with market expectations for 9.1%. This indicates that manufacturing activity in the mid-Atlantic region still expanded in the last month. On an ISM-weighted basis, the index increased modestly, indicating that the details were still strong.

New Orders increased sharply by 38.0%. Shipments increased by 28.6%. Unfilled Orders rose sharply while Inventories dropped.

Employment increased sharply by 11.1%. This portends better factory job creation in the upcoming February payroll employment report.

Prices Paid decelerated modestly.

The 6-Month Outlook deteriorated.

Article by Contingent Macro Advisors