Research >> Economics
Philadelphia Fed April Outlook Contracted Less Severely
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The region's manufacturing sector contracted less severely this month, according to firms polled for the April Business Outlook Survey. Indexes for general activity, new orders, and employment remained negative but improved somewhat from March. Indicative of continued weakness, firms reported declines in input prices and prices for their own manufactured goods, and the corresponding price indexes reached record lows this month. Most of the survey's broad indicators of future activity improved notably this month, suggesting that the region's manufacturing executives expect declines to bottom out over the next six months.
Some Indicators Suggest Declines May Be Diminishing
The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -35.0 in March to -24.4 this month. Although clearly indicating continued overall decline, this reading is the highest since January. The index has been negative for 16 of the past 17 months, a span that corresponds to the current recession (see Chart). The new orders index remained negative but showed similar improvement, increasing 16 points from a 29-year low in March. The survey's shipments index decreased nine points, to -35.7, its lowest reading since the beginning of the survey in 1968. The survey's index of current inventories increased 15 points from its record low reading of -55.6 last month. The survey's indexes for delivery times and unfilled orders showed similar improvement this month but continued to reflect overall weakness.
Employment losses remained widespread this month, with over 45 percent of the firms reporting declines. The current employment index, though still negative at -44.9, increased seven points from its record low reading last month. Over 44 percent of the firms also reported fewer work hours this month, and the average workweek index decreased 10 points.
Posted: April 16, 2009 Thursday 10:00 AM