This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.
The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a reliable direction of the broader Chicago Fed's National Activity Index.
The latest manufacturing Index came in at -8.9, up 4.8 from last month's -13.7, marking the index's fifth negative reading in a row and the seventh in the last eight months. The three-month moving average came in at -12.7, down from last month. The six-month outlook came in at 4.9, up from the previous month's -0.9. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion.
The -8.9 headline number came in below the -11 forecast at Investing.com.
Here is the introduction from the survey:
Manufacturing activity in the region continued to decline overall, according to the firms responding to the January Manufacturing Business Outlook Survey. The survey’s indicators for general activity, new orders, and shipments rose from last month, but the former two remained negative. The employment index rebounded. The firms reported overall increases in prices: The prices received index remained elevated, while the prices paid index returned to average readings. Most future indicators were positive, but expectations for growth over the next six months were not widespread. (Full Report)
The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the three-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011, 2012, and 2015, and a shallower contraction in 2013. The contraction due to COVID-19 is clear in 2020.
In the next chart, we see the complete series, which dates from May 1960. For proof of the high volatility of the headline indicator, note that the average absolute monthly change across this data series is 8.0.
The next chart is an overlay of the General Activity Index and the Future General Activity Index — the outlook six months ahead.
For comparison, here is the latest ISM Manufacturing survey.
Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2004 (for those with data).
Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.
Here are the remaining four monthly manufacturing indicators that we track:
Texas Manufacturing Outlook Survey (TMOS)
Kansas City Manufacturing Survey
Empire State Manufacturing Survey
Fifth District Manufacturing Survey (Richmond)
Regional Fed Overview
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