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Philadelphia Fed NonManufacturing Survey Suggest Activity Expanded in July
Responses to the July Nonmanufacturing Business Outlook Survey suggest an expansion of nonmanufacturing activity in the region. The index for general activity at the firm level and the index for sales/revenues both gained after two consecutive months of decline, while the new orders index increased for the second consecutive month. Full-time employment moderated slightly. The firms continued to report overall increases in the prices of both their own goods and their inputs. The respondents continued to anticipate growth over the next six months.
Current Indicators Rebound
The diffusion index for current general activity at the firm level climbed 12 points to 24.6 in July (see Chart 1), after falling 16 points in June. Thirty-eight percent of the firms reported increases in activity (up from 31 percent last month), compared with 13 percent that reported decreases. The new orders index rose 11 points to 25.5. The share of firms reporting increases in new orders (33 percent) was higher than the share reporting decreases (7 percent). The sales/revenues index rose from 17.0 in June to 22.5 in July, after declining 10 points in June. Over 41 percent of the responding firms reported increases in sales/revenues, while 19 percent reported decreases. The regional activity index increased 13 points to 21.4, after a 9 point fall in June.
Employment Indicators Moderate
The firms continued to report overall increases in full-time and part-time employment. The full-time employment index fell 3 points to 21.1. Nearly 71 percent of the firms reported steady full-time employment levels, while the share of firms reporting increases (25 percent) was higher than the share reporting decreases (4 percent). The part-time employment index fell 9 points to 11.6, and the wages and benefits indicator fell 7 points to 37.0. The average workweek index was stable at 18.7.
Firms Continue to Report Overall Price Increases
Both price indicator readings suggest overall increases in prices for inputs and for the firms’ own goods and services, but the price indexes moved in opposite directions this month. The prices paid index fell 10 points to 12.2 (see Chart 2). Although the majority of respondents (68 percent) reported stable input prices, 14 percent of the respondents reported increases, while only 2 percent reported decreases. Regarding prices for firms’ own goods and services, the prices received index jumped 12 points from June to 20.5 in July. While 21 percent of the firms reported increases in prices received, none reported decreases. Nearly 67 percent of the firms reported no change in their own prices.
Expectations for Future Growth Recovers
The firms’ expectations for growth over the next six months strengthened as both future activity indexes increased this month after falling sharply in June. The diffusion index for future activity at the firm level moved up from a reading of 26.4 in June to 36.0 this month (see Chart 1). Fifty percent of the firms expect an increase in activity at their firms over the next six months (up from 45 percent last month), compared with 14 percent that expect decreases (down from 19 percent last month). Nearly 37 percent of the firms expect no change over the next six months. The future regional activity index strengthened 11 points to 21.8.
Responses to this month’s Nonmanufacturing Business Outlook Survey suggest that nonmanufacturing activity expanded in the region, recovering from a broad decline in June. The indicators for firm-level general activity, sales/revenues, and new orders all rose, while the full-time employment index moderated slightly. Overall, the respondents continue to expect growth over the next six months at their own firms and in the region.
Posted: July 23, 2019 Tuesday 08:30 AM