Philadelphia Fed Survey: Declines Modestly

Bottom Line: Manufacturing activity of mid-Atlantic based businesses shrank modestly, more than expectations. Weaker than last week’s Empire State Manufacturing Survey, -9.9% vs. 5.9% on a ISM weighted basis, it suggests that the early outlook for the national ISM Manufacturing Survey, to be reported on May 2, is mixed. The Philadelphia Fed Index FELL by 14.0 points in April to -1.6%, compared with market expectations for a small decrease to 9.0%. This indicates that manufacturing activity in the mid-Atlantic region contracted modestly. On an ISM-weighted basis, the index deteriorated sharply, indicating that the details were weaker than the headline figure. New Orders were unchanged. Shipments decreased by 10.8%, their first decline in the past 4 months. Unfilled Orders fell moderately while Inventories dropped, their 10th consecutive decline. Employment decreased sharply by 18.5% and continued to decline for the fourth straight month. This portends weaker factory job creation in the upcoming April payroll employment report. Prices Paid increased moderately. The 6-Month Outlook improved as business executives were more optimistic about the factory sector's prospects.