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Economy in Brief

Philadelphia Fed Nonmanufacturing Business Conditions Recover
by Tom Moeller  January 23, 2018

The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions at the company level increased to 29.3 in January from 20.6 during December. It was the highest index level since August. Forty-six percent of respondents reported an increase in current activity while 17% reported a decline. The expectations index at the company level for January surged to 62.6, a twelve-month high.

The new orders index jumped to a level not seen since September. The sales or revenue figure, however, declined moderately. Unfilled orders similarly fell. The number of full-time permanent employees declined sharply to the first negative reading since December 2012. The index of part-time/temporary employment increased m/m to the highest level since June. The average workweek reading eased slightly. Capital expenditures on facilities jumped to the highest level in twelve months, while spending on equipment and software also strengthened.

The index of prices paid added to its recent gains and was sharply higher than its June low. Thirty-two percent of respondents paid higher prices while four percent paid less. The prices received index also surged to a twelve-month high, but the wages and benefits index weakened significantly.

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) Jan Dec Nov Jan'17 2017 2016 2015
General Activity - Company 29.3 20.6 18.5 32.0 27.3 19.7 31.3
  New Orders 21.6 12.2 16.3 25.8 19.1 15.7 21.8
  Sales or Revenue 23.9 28.7 20.7 37.3 27.9 16.2 23.8
  Inventories -3.6 2.6 3.7 8.9 3.8 4.4 5.2
  Number of Full-Time Permanent Employees -0.4 10.5 19.5 17.2 14.8 11.7 15.6
  Prices Paid 27.8 27.1 23.8 26.3 21.4 17.5 19.3
  Wage & Benefit Costs 29.9 33.9 41.6 37.9 33.4 31.2 32.5
Expected General Activity - Company 62.6 45.1 43.4 66.1 49.9 43.0 53.8
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