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Economy in Brief

Philadelphia Fed Survey Shows Deterioration in Nonmanufacturing Business
by Tom Moeller  March 22, 2016

The Federal Reserve Bank of Philadelphia reported that its Index of Nonmanufacturing Sector Activity at the company level fell to 17.5 in March. The measure has been declining since early last year. The expectations index for general activity improved m/m, but a downtrend remained in place. These diffusion indexes are seasonally adjusted.

Deterioration in the labor market components recently has paced the declines in the total index. The full-time jobs index fell to its lowest level since July and the part-time employment figure declined similarly. The average workweek reading also deteriorated to a July low, and the wage & benefit costs reading neared an early-2014 low.

The prices paid diffusion index collapsed to its weakest reading since the end of 2014, but prices received continued to strengthen.

The sales or revenue index improved this month, but remained well below the 2013 high. The same pattern is exhibited in the new orders index, though it's below a 2014 high. The inventories index bounced sharply higher to its strongest level in nearly a year. The unfilled orders reading improved to its best figure since October. The capital spending readings also improved.

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, SA) Mar Feb Jan Mar'15 2015 2014 2013
General Activity - Company 17.5 25.6 21.4 34.6 31.4 38.8 29.8
  New Orders 17.0 14.6 14.5 26.5 21.7 27.9 20.2
  Sales or Revenue 19.0 9.1 14.0 29.0 23.6 30.2 27.0
  Inventories 8.3 -0.5 1.5 7.3 5.2 5.8 3.0
  Number of Full-Time Permanent Employees 6.1 11.1 12.8 17.1 15.6 17.3 18.8
  Prices Paid 3.2 18.9 16.8 19.1 19.3 19.7 20.6
Expected General Activity - Company 42.2 30.5 23.5 42.7 54.0 60.1 47.4
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