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Philadelphia NonManufacturing Activity Suggest Continued Expansion in June
Results from the June Nonmanufacturing Business Outlook Survey indicate continued expansion of nonmanufacturing activity in the region. The firm-level index of general activity and new orders remained elevated, while the full-time employment index rose notably. The firms continued to report overall increases in prices of both their own goods and their inputs. The respondents anticipated growth for their own firms and the region over the next six months.
Current Indicators Remain Elevated
The diffusion index for current general activity at the firm level edged up from 39.5 in May to 40.7 in June, marking an increase for the second consecutive month (see Chart 1). More than 56 percent of the firms reported increases in activity, compared with 15 percent that reported decreases. The regional activity index moderated, falling 6 points to 39.1, but remains above its historical average of 24.3. The new orders index edged down 1 point to 35.5, following last month’s increase of 24 points. The share of firms reporting increases in new orders (49 percent) exceeded the share reporting decreases (14 percent). The sales/revenues index declined moderately, falling from 33.7 in May to 24.6 in June. Nearly 46 percent of the responding firms reported increases in sales/revenues, while 21 percent reported decreases.
Employment Indicators Rise Notably
More firms reported increases in both full-time and part-time employment this month, although most firms continued to report stable employment levels. The full-time employment index increased from 7.7 in May to 19.9 in June. While most firms (60 percent) continue to report steady full-time employment levels, the share of firms reporting increases (30 percent) was higher than the share reporting decreases (10 percent). The part-time employment index increased 10 points to 21.8, while the average workweek index fell 11 points to 15.7. The wages and benefits indicator posted a 5 point increase from 46.4 to 51.1, its highest-ever reading.
Price Indicators Continue Upward Trend
Both price indicators increased for the second consecutive month. The prices paid index rose 3 points to 36.6 (see Chart 2). Although the majority of firms (51 percent) reported no change in input prices, 39 percent of the respondents reported increases, while only 2 percent reported decreases. The prices received index rose from 22.6 in May to 28.5 in June, its highest reading since May 2015. Almost 33 percent of the firms reported increases in prices received, while only 4 percent reported decreases. Half of the firms reported no change in their own prices.
Expectations for Future Activity Strengthen
Both future activity indexes increased for the second consecutive month. The diffusion index for future activity at the firm level increased from 45.3 to 58.2 (see Chart 1). Almost 68 percent of the firms expect an increase in activity at their firms over the next six months, compared with 9 percent that expect a decline. The future regional activity index rose 3 points from last month to 53.6.
Most Firms Report Using Advanced Technologies
In this month’s special questions (see Special Questions), the firms were asked which advanced technologies they have adopted (or are planning to adopt) and how they expect these technologies to affect their prices and employment levels. Among the responding firms, the most frequently cited technologies were cloud computing (59 percent), e-commerce (38 percent), and big data (21 percent). When asked how the adoption of these technologies will affect their own prices, most respondents indicated a slight increase (42 percent) or little or no impact (40 percent). When asked how the adoption of these technologies will affect their employment levels, the same share of firms (16 percent) indicated a slight increase or a slight decrease; however, most indicated little or no impact (52 percent).
Responses to this month’s Nonmanufacturing Business Outlook Survey suggest that nonmanufacturing activity continued to expand in the region. The indicators for firm-level general activity and new orders remained elevated, while the firms reported overall increases in both full-time and part-time employment. The respondents remain optimistic about growth over the next six months at their own firms and in the region.
Posted: June 26, 2018 Tuesday 08:30 AM