Research >> Economics

Philadelphia Fed NonManufacturing Survey Suggest Activity moderated in December


Responses to the December Nonmanufacturing Business Outlook Survey suggest a moderation of nonmanufacturing activity in the region. The indexes for general activity at the firm level, new orders, and sales/revenues all fell but remained positive. The index for full-time employment remained stable. The firms continued to report overall increases in the prices of both their own goods and their inputs, and both price indexes rose. The respondents continued to anticipate growth over the next six months, as both future activity indexes strengthened.

Current Indicators Soften
The diffusion index for current general activity at the firm level fell 26 points to 5.8 in December, its lowest reading since January. More than 37 percent of the firms reported increases in activity (down from 41 percent last month), and 32 percent reported decreases (up from 10 percent last month). The new orders index decreased 10 points to 15.7 in December. The share of firms reporting increases in new orders (32 percent) was higher than the share reporting decreases (16 percent). The sales/revenues index fell 23 points to 10.2 in December, its lowest reading since January. Over 41 percent of the responding firms reported increases in sales/revenues, while 31 percent reported decreases. The regional activity index dropped 7 points to 13.4.

Full-Time Employment Indicators Remain Positive
The firms continued to report overall increases in full-time and part-time employment. The full-time employment index held mostly steady at 21.7. Over 63 percent of the firms reported steady full-time employment levels, while the share of firms reporting increases (28 percent) was higher than the share reporting decreases (7 percent). The part-time employment index edged down 3 points to 7.3, and the wages and benefits indicator rose 9 points to 45.3. The average workweek index increased 4 points to 16.7.

Price Indicators Strengthen
Price indicator readings suggest overall increases in prices for inputs and for the firms’ own goods and services, with both indicators rising. The prices paid index rose 8 points to 36.6. Forty-one percent of the respondents reported stable input prices, while 43 percent of the respondents reported increases and only 6 percent reported decreases. Regarding prices for firms’ own goods and services, the prices received index rose 6 points from November to 16.9 in December. Twenty-three percent of the firms reported increases in prices received, and only 6 percent reported decreases. More than 61 percent of the firms reported no change in prices for their own goods and services.

Firms’ Optimism for Future Growth Improves
Both future activity indexes suggest that firms anticipate continued growth over the next six months. The diffusion index for future activity at the firm level moved up from a reading of 47.2 in November to 58.0 this month. Nearly 66 percent of the firms expect an increase in activity at their firms over the next six months (up from 57 percent last month), compared with 8 percent that expect decreases and 24 percent that expect no change over the next six months. The future regional activity index increased 12 points to 32.7.

Summary
Responses to this month’s Nonmanufacturing Business Outlook Survey suggest that nonmanufacturing activity moderated in the region. The indicators for firm-level general activity, sales/revenues, and new orders all fell, while the full-time employment index held steady. Overall, the respondents continue to expect growth over the next six months in their own firms and in the region.






Posted: December 24, 2019 Tuesday 08:30 AM




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