U.S. Philadelphia Fed Manufacturing Index Declines in December

The Current General Activity Diffusion Index declined to -16.4 during December after falling to -5.5 in November, according to the Manufacturing Business Outlook Survey (MBOS) from the Federal Reserve Bank of Philadelphia, indicating further deterioration in factory sector activity this month. A reading of 2.5 had been expected in the Action Economics Forecast Survey. Sixteen percent of the firms reported increases in general activity in December while 32.7% reported decreases. Responses to this month's survey were collected between December 9 and December 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 48.6 in this month from 49.2. It was the lowest reading in six months, down from a high of 54.9 in July.

The new orders index fell to -4.3 this month after declining to 8.9 in November, while the shipments series declined to -1.9 after falling to 4.5. Surging higher, however, was the unfilled orders index to 18.9, its highest level since March 2022. The delivery times reading jumped to 11.6 after weakening to -2.1 and the inventories index declined to -2.3 after rising to 5.4 last month.

The current employment index declined to 6.6 in December after rising to 8.6 in November, suggesting an overall increase in employment. Seventeen percent of respondents reported increases in employment last month while an increased 10.6% reported declines. The average employee workweek index collapsed to -8.2 and reversed most of its rise to 17.4 in November.

Inflation indicators were mixed this month. The prices paid index rose to 31.2 after falling to 26.6 last month. The index is up from a low of 3.7 in March. A higher 34.0% of respondents reported increases in input prices in December while 2.8% reported decreases. To the downside, the prices received index declined to 7.3 after falling to 14.3 in November It was down from a September high of 24.6. A lessened 12.0% of respondents reported increases in prices while an increased 4.7% reported declines.

The future activity index declined to 30.7 in December after surging to 56.6 during November. The reading hit its low of -4.0 in January. Most of the components declined, including new orders, shipments, order backlogs and employment. The expected capital spending measure fell sharply. Inventories and the length of the workweek increased. The expected prices paid series fell from the highest level since April 2022, but prices received increased.

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.