Research >> Economics
Philadelphia Fed June Outlook Reflects Near Steady Levels of Activity
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Declines in the region's manufacturing sector were much less in evidence in June, according to results for this month's Business Outlook Survey. Indexes for general activity, new orders, and shipments showed notable improvement, suggesting recent declines have lessened dramatically. Indicative of ongoing weakness, however, firms reported sustained declines in employment and work hours this month. Most of the survey's broad indicators of future activity showed continued improvement, suggesting that the region's manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months.
Current Indicators Reflect Near Steady Levels of Activity
The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -22.6 in May to -2.2 this month, its highest reading since September 2008 when the index was positive for one month (the index has been negative for 18 of the past 19 months, a span that corresponds to the current recession; see Chart). Firms are nearly evenly divided among those indicating increases (30 percent), decreases (32 percent), and no change (35 percent). The new orders and shipments indexes showed parallel increases this month, both rising 21 points, to -4.8 and 2.1, respectively. Although remaining negative, the survey's current inventory index rose for the third consecutive month, increasing 13 points; the index is now 40 points above its record low reading in March. The survey's indexes for delivery times and unfilled orders suggest continued weakness, however, with their negative readings showing little change from last month.
Firms continue to report employment losses and declines in work hours. The current employment index remained at a relatively weak -21.8, although it increased five points from May. Still, 31 percent of firms reported declines in employment this month; only 10 percent reported increases. The average workweek index weakened this month: It fell three points, to -26.6
Posted: June 18, 2009 Thursday 09:56 AM