May 2017 Philly Fed Manufacturing Survey Declined But Remains Firmly In Expansion

The Philly Fed Business Outlook Survey significantly improved and remains firmly in expansion. Key elements are in expansion.

Analyst Opinion of the Philly Fed Business Outllook Survey

There is continuing significant strength in this survey from new orders. Note that the New York Fed manufacturing survey (released earlier this week) returned to contraction.

This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the more negative of all the Fed manufacturing surveys but has been more positive than the others recently.

The index moved from +22.0 to +38.8. Positive numbers indicate market expansion, negative numbers indicate contraction. The market expected (from Bloomberg/Econoday) 16.0 to 25.0 (consensus +19.6).

Results from the May Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand this month. The diffusion indexes for general activity and shipments improved notably from their April readings. The indexes for new orders and employment, however, fell modestly from last month but remained at high readings. Although most of the survey’s future indicators fell this month, the readings suggest that most firms still expect growth to continue over the next six months.

Current Indicators Reflect Continued Growth

The index for current manufacturing activity in the region increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. This month, the index recovered some of the declines of the previous two months, but it still remains slightly below its high reading of 43.3 in February (see Chart 1). Fifty-one percent of the firms indicated increases in activity in May, while 13 percent reported decreases. The current new orders and shipments indexes remained at high readings. The shipments index increased 16 points, while the new orders index declined 2 points. Both the delivery times and unfilled orders indexes were positive for the seventh consecutive month, suggesting longer delivery times and increases in unfilled orders.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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