U.S. Philadelphia Fed Index Moves Up in September

The Current General Activity Diffusion Index rose to 1.7 during September from -7.0 in August, according to the Manufacturing Business Outlook Survey (MBOS) from the Federal Reserve Bank of Philadelphia, indicating modest improvement in activity in the third Federal Reserve District this month. A reading of -1.0 had been expected in the Action Economics Forecast Survey. Twenty-two percent of the firms reported increases in general activity in September while 20.2% reported decreases. Responses to this month's survey were collected from September 9 to September 16.

Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology along the lines of the national ISM index. The index declined to 49.3 in September after falling to 52.5 in August.

The new orders index fell to -1.5 this month after weakening to 14.6 in August, while the shipments series plummeted to -14.3, the lowest level since March of last year, after falling sharply to 8.5 in August. The unfilled orders index declined to -6.7 from 3.2 and the delivery times reading weakened to -0.7 after rising to 14.1 in August. Working higher, the inventories index increased to 5.0 this month after improving to -4.8 in August.

The number of employees’ index increased to 10.7 in September after falling to -5.7 in August, suggesting an overall increase in employment. Eleven percent of respondents reported increases in employment in September while none reported a decline. The average employee workweek index weakened to -13.6 in September from -2.3 in August.

Inflation indicators moved higher this month. The prices paid index rose sharply to 34.0 in September after rising to 24.0 in August. It was the highest level since December 2022. A higher 34.0% of respondents reported increases in input prices in June while none reported decreases. The prices received index rebounded to 24.6 and retraced its August decline to 13.7. A higher 24. 6% of respondents reported increases in the prices while no respondent reported a decline.

The future activity index edged up to 15.8 this month after declining to 15.4 from 38.7 in July. All of the components rose, notably unfilled orders, inventories and the average workweek. New orders, shipments, delivery times and employment showed lesser gains. The prices paid series recaptured most of its August decline while prices received did the same. The expected capital spending measure strengthened to its highest level in two and one-half years.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The series from the survey dating back to May 1968 can be found in Haver's SURVEYS database. The expectations forecast figures are from the Action Economics Forecast Survey in AS1REPNA.