Philly Fed Index Falls For 2nd Consecutive Month

Indeed, new orders (down from 9.4 to -10.6), shipments (down from 14.8 to -6.1) and hiring (down from 10.2 to -1.7) each shifted from modest growth to contracting levels of activity for the month.

A few of the Fed districts expressed concern about the strength of the U.S. dollar on exports and tourism, but housing and consumer spending remained a relative bright spot.

Looking ahead, the New York Fed said the indexes for the six-month outlook were little changed from last month and suggested that optimism about future business conditions remained muted. The Philadelphia survey follows a report earlier Thursday from the New York region, which showed dismal conditions across that state. The index for number of employees fell for a fourth consecutive month, slipping two points to -8.5 in a sign that employment levels were lower. “Firms also reported overall declines in average work hours in October, and the workweek index was negative for the first time since May”. Sixty percent reported steady input prices.

The diffusion index for future general activity fell to 36.7 in October from 44.0 in September, but 53% of firms expect increases over the next six months compared to the 16% that expect decreases. For the US, the capacity utilization rate for the manufacturing sector, overall, is estimated to be near the same as it was one year ago.

According to the report, “For the second consecutive month, regional manufacturers reported declines in overall activity”.

The new orders index dropped to a negative 18.9 from a negative 12.9, the shipments index slid to a negative 13.6 from a negative 8.0 and the unfilled orders index dropped to a negative 15.1 from a negative 8.3. When the index is above 0 it indicates factory-sector growth, and when below 0 indicates contraction.

Special Questions (October 2015) –1. Do you expect the following capital expenditure categories over the next year (2016) to be higher than, the same, or lower than in the current year?

The Business Outlook Index for October was reported at -4.5, which was below the consensus for a reading of -1.0 but above last month’s reading of -6.0 (Aug: +8.3%, July: +5.7).