Article Attachment

The attached file contains this articles commentary as well as tables and charts of the data.
Download Attachment

Philly Fed: Sharp Decline in Manufacturing

July 21, 2022
Bottom Line: The Philadelphia Fed's index of manufacturing activity fell sharply, dashing hopes that last month's deceleration was just normal volatility. Nearly every major subcomponent showed slowing activity, with the index in negative territory when recalculated on an ISM-weighted basis. New and unfilled orders contracted, as the index of expectations for future orders dropped deeper into negative territory. On the plus side, the significant backlog of orders meant shipments of goods held close to recent averages. Prices paid also eased notably as supply chain bottlenecks appear to be easing. Overall, the tremendous uncertainty that manufacturers have managed for over a year is finally taking its toll as higher interest rates and inflation sap demand. More regional surveys in the coming weeks will give us a better sense of just how much slowdown (and possible contraction) we can expect at the national level.
The Philadelphia Fed Manufacturing Index
FELL -9 points to -12.3, BELOW the 3-Month average of -4.33, BELOW the 6-Month average of 8 and -34.2 BELOW the year-ago level.  On an ISM-weighted basis the index FELL -8.2 points to -2.3, BELOW the 3-Month average of 9.03, BELOW the 6-Month average of 16.07 and -24 BELOW the year-ago level.
  • New Orders FELL -12.4 points to -24.8, BELOW the 3-Month average of -5.03, BELOW the 6-Month average of 7.12 and -41.8 BELOW the year-ago level.  
  • Shipments ROSE 4 points to 14.8, BELOW the 3-Month average of 20.3, BELOW the 6-Month average of 20.6 and -9.8 BELOW the year-ago level.  
  • Unfilled Orders FELL -3.4 points to -10.4, BELOW the 3-Month average of 0.17, BELOW the 6-Month average of 7.17 and -29.4 BELOW the year-ago level.  
  • Delivery Time FELL -20.1 points to -10.2, BELOW the 3-Month average of 5.73, BELOW the 6-Month average of 16.3 and -43.5 BELOW the year-ago level.  
  • Inventories FELL -7.1 points to -9.3, BELOW the 3-Month average of -2.77, BELOW the 6-Month average of 1.35 but -5.3 ABOVE the year-ago level.  
  • Prices Paid FELL -12.3 points to 52.2, BELOW the 3-Month average of 65.2, BELOW the 6-Month average of 71.75 and -17.5 BELOW the year-ago level.  
  • Employment FELL -8.7 points to 19.4, BELOW the 3-Month average of 24.33, BELOW the 6-Month average of 30.93 and -9.8 BELOW the year-ago level.  
  • Future Activity Index FELL -11.8 points to -18.6, BELOW the 3-Month average of -7.63, BELOW the 6-Month average of 6.02 and -67.2 BELOW the year-ago level.  
  • Future Capital Expenditures FELL -7.3 points to 4.4, BELOW the 3-Month average of 8.57, BELOW the 6-Month average of 15.32 and -36.8 BELOW the year-ago level.
Article by Contingent Macro