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Economy in Brief

Philadelphia Fed Survey Shows Nonmanufacturing Business Conditions Deteriorating Further
by Tom Moeller  January 26, 2016

The Federal Reserve Bank of Philadelphia reported that its Index of Nonmanufacturing Sector Activity at the company level fell to 15.9 in January. It was the third month of decline, sliding to the lowest level since August. Expectations for general activity deteriorated to a greater extent; falling to the lowest level since August 2012. These diffusion indexes are not seasonally adjusted.

Lower figures for new orders and sales led the m/m deterioration, followed by unfilled  orders and inventories.

On the labor front, the number of full-time employees has been moving sideways since July but part-time employment strengthened to the firmest reading since June. The length of the workweek has been roughly steady for three months but was well below the Q2 highs. Wage & benefit costs strengthened sharply during the last six months.

The index of prices paid eased m/m and remained well below the June high.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. The data is available in Haver's SURVEYS database.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, NSA) Jan Dec Nov Jan'15 2015 2014 2013
General Activity - Company 15.9 25.5 26.3 8.8 31.5 39.1 30.0
  New Orders 9.1 19.6 15.8 14.7 21.7 28.0 20.2
  Sales or Revenue 4.5 25.5 22.8 8.8 23.7 30.4 27.2
  Inventories -2.3 0.0 5.3 -2.9 5.2 5.8 3.0
  Number of Full-Time Permanent Employees 11.4 17.6 10.5 17.6 15.6 17.4 19.0
  Prices Paid 15.9 21.6 19.3 14.7 19.3 19.7 20.6
Expected General Activity - Company 29.5 52.9 50.9 44.1 54.3 69.4 47.8
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