Philadelphia Fed Manufacturing Index Remains Negative in October

The Federal Reserve Bank of Philadelphia reported in its October survey of manufacturing activity that the Current Activity Diffusion Index of -9.0 this month compared to -13.5 in September and 12.0 in August. It remained up from a low of -31.3 in April. The figure compared to expectations for -6.4 in the Action Economics Forecast Survey. The Philly Fed survey responses were collected from October 9 to October 17.

The ISM-Adjusted Composite Index, calculated by Haver Analytics from the survey results, improved to 48.8 in October from 47.2 in September. Below 50, it still was suggesting a net contraction in activity. It compared to a March low of 39.4.

Changes in the individual series remained mixed. New orders rose to 4.4 from -10.2 in September. An improved 34.4% of respondents reported an increase in new orders while a slightly greater 30.0% reported a decline. The shipments index rose to 10.8 from -3.2, as a higher 30.4% reported increased shipments and 19.5% reported declines.

To the downside, the unfilled orders measure fell to -16.8 from -13.6 in September and was negative for the fifth straight month. Eighteen percent reported an increase in order backlogs while 34.5% reported a decline. The delivery times index also moved down to -21.4 from -14.9 as 9.3% of respondents reported quicker delivery speeds and 30.7% reported a slowdown. The inventories reading fell to -7.0 this month, negative for the fourth month in the last five.

Job market conditions were mixed this month as indicated by an employment reading which improved to 4.0 from -5.7. Seventeen percent of respondents reported more hiring while 13.1% reported less. Moving the other way, the average workweek figure weakened to -4.3 after two straight positive readings.

The index of prices paid fell this month to 23.1 after September’s rise to a seven month high of 25.7, up from a low of 8.2 in April. This reflected 29.1% of respondents reporting increased prices and 6.0% reporting a decline. Holding fairly steady at 14.6 was the prices received index. It remained up from a low of -7.0 in May. A fewer 21.2% of respondents reported price increases and a lessened 6.6% reported declines.

Expectations for business conditions in the next six months weakened this month with the reading of 9.2 down from 11.1 in September. It remained down from a high of 29.1 in July. The October survey showed deterioration in expected shipments as well as new & unfilled orders. Employment expectations were modestly positive while the expected workweek reading remained slightly negative. Expectations for prices paid also held fairly steady with September but were greatly elevated from February’s low. The prices received index surged to the highest level since May of last year.

The diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The Philadelphia Fed data can be found in Haver's SURVEYS database. The expectations forecast figures are from the Action Economics Forecast Survey in AS1REPNA.