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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Index Improves Further
by Tom Moeller  February 21, 2017

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions in February rose to 38.0 from 33.3 during January. It was the highest level since June 2015. Forty-four percent of respondents reported an increase in current activity, while six reported less. The expectations index at the company level for January eased to 57.5, a three-month low. The regional expectations index declined to 33.0, also a three-month low.

The new orders index backed away from its two-year high with a lessened 33% of respondents reporting an increase in orders. The sales/revenues index similarly declined sharply. On the employment front, the index of full-time permanent employees declined to a three-month low, while the index for part-time or temporary employment held steady m/m. Wage & benefit cost gains weakened. The average employee workweek index declined to the lowest point since July. The capital expenditures reading on physical plant as well as equipment & software fell sharply.

The index for prices paid retraced three months of increase. The index of prices received turned negative for the first time since 2012.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.

Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) Feb Jan Dec Feb'16 2016 2015 2014
General Activity - Company 38.0 33.3 26.1 26.2 19.7 31.3 38.7
  New Orders 25.3 28.9 20.2 18.6 15.6 21.7 27.9
  Sales or Revenue 32.5 43.5 20.4 14.0 16.1 23.6 30.2
  Inventories 5.7 10.4 11.2 0.7 4.4 5.2 5.8
  Number of Full-Time Permanent Employees 12.4 19.5 16.7 11.5 11.7 15.5 17.3
  Prices Paid 15.3 29.5 18.1 18.9 17.5 19.2 19.7
Expected General Activity - Company 57.5 68.3 61.6 26.9 36.1 53.8 59.9
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