Courtesy of Mish.
On the surface the Philadelphia Fed Manufacturing index was in positive territory at 2. Peeking under the hood, a significant number of problems become visible.
Philadelphia Fed General Activity Index
Image from the Philadelphia Fed August 2016 Manufacturing Business Outlook Survey. Blue highlights mine.
The report states: “The index for current manufacturing activity in the region rose 5 points to only 2.0 in August, as the share of firms reporting an increase in activity (35 percent) barely exceeded the share reporting a decrease (33 percent). This is only the third positive reading of the index in the current year.”
Peeking Under the Hood
- Current new orders index dropped from a reading of 11.8 in July to -7.2 in August. The percentage of firms reporting an increase in new orders (27 percent) was less than 1 point lower than last month; however, the percentage of firms reporting a decrease (34 percent) was 18 points higher than last month.
- The current shipments index rose slightly, from 6.3 to 8.4. The percentage of firms reporting an increase in shipments (35 percent) was 6 points higher than last month.
- The indexes for unfilled orders and delivery times fell into negative territory, recording values of -15.0 and -3.8, respectively. The index for inventories dropped from -4.3 to -9.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year.
- The employment index fell 18 points to -20.0, which is its largest negative reading for the current year. Although 67 percent of the firms reported no change in employment this month, the percentage reporting decreases (25 percent) significantly exceeded the percentage reporting increases (5 percent).
- The workweek index fell from -3.6 to -11.5. Twenty-five percent of the firms reported a decrease in average work hours, and only 13 percent reported an increase.
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