The Federal Reserve Bank of Philadelphia's August Manufacturing Business Outlook Survey showed manufacturing activity in the region continuing to expand, with the headline general business activity index rising to +47.4 from +41.4 in July — a five-year high — and well above the +25.0 consensus forecast.

The headline reading is drawn from a standalone question on overall business conditions rather than computed as a composite of the component indexes, which is why it can strengthen even as individual sub-indexes soften — as it did this month.

Current-conditions detail

• New orders: 30.1 vs. 37.0 last month
• Shipments: 27.7 vs. 33.7 last month
• Unfilled orders: 14.4 vs. 18.1 last month
• Delivery times: 3.7 vs. 9.6 last month
• Inventories: -3.7 vs. 0.3 last month
• Prices paid: 40.9 vs. 53.9 last month
• Prices received: 17.7 vs. 27.4 last month
• Number of employees: 27.9 vs. 10.0 last month
• Average employee workweek: 26.5 vs. 14.0 last month

According to the survey, the new orders and shipments indexes moved lower but remained elevated. The employment index rose, continuing to suggest overall gains in employment, while both price indexes declined this month but remained elevated. The delivery-times index falling to 3.7 from 9.6 indicates far fewer firms reported slower supplier deliveries, while the inventories index slipping to -3.7 means more firms reported declining than rising stocks.

Six-month forward indicators

• Six-month general activity index: 73.6 vs. 34.4 last month
• Six-month capex index: 48.2 vs. 30.1 last month
• New orders: 66.0 vs. 35.1 last month
• Shipments: 63.5 vs. 39.3 last month
• Unfilled orders: 8.5 vs. 20.9 last month
• Delivery times: 0.0 vs. 9.3 last month
• Inventories: 17.4 vs. 12.5 last month
• Prices paid: 62.9 vs. 56.7 last month
• Prices received: 59.8 vs. 41.4 last month
• Number of employees: 35.4 vs. 29.5 last month
• Average employee workweek: 21.4 vs. 12.0 last month

Most future indicators jumped higher this month, suggesting widespread expectations among respondents for overall growth over the next six months, the survey showed. The six-month capex index climbing to 48.2 from 30.1 indicates a larger share of firms expect to raise capital spending over that horizon. Whether incoming orders, shipments, and hiring in the months ahead validate that optimism is the key check to watch as subsequent monthly releases arrive.

The Philadelphia Fed's Manufacturing Business Outlook Survey is released monthly and polls manufacturers in the Third Federal Reserve District, covering eastern Pennsylvania, southern New Jersey, and Delaware. Its diffusion indexes are read such that figures above zero indicate expansion and figures below zero indicate contraction; they capture the net share of firms reporting improvement rather than the magnitude of the change. Although regional in scope, the survey lands among the earliest monthly reads on US factory conditions — the existence of a consensus forecast for the release, which it comfortably beat this month, reflects how closely economists and markets track it — and its results are typically weighed alongside other regional Fed manufacturing surveys and national measures such as the ISM manufacturing PMI.

Source: ForexLive