The Philly Fed’s August Business Outlook Survey is out.
The headline index fell to 9.3 from July’s 19.8 reading. Economists were expecting a smaller drop to 15.0.
The numbers suggest that the pace of expansion in regional manufacturing slowed sharply, but still remained at a moderate level over the past month.
Below is a summary of the data from the release:
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 19.8 (its highest reading since March 2011) to 9.3 this month (see Chart). The index has now been positive for three consecutive months. The percentage of firms reporting increased activity this month (28 per cent) was greater than the percentage reporting decreased activity (19 per cent).
Other current indicators suggest growth moderated this month. The demand for manufactured goods as measured by the current new orders index remained positive for the third consecutive month but fell 5 points to 5.3. The shipments index fell 15 points to just below zero, its first negative reading in three months. Both unfilled orders and delivery times indexes were negative this month, suggesting continued slack conditions.
Labour market indicators showed only modest improvement this month. The current employment index, at 3.5, fell 4 points but has been slightly positive for two consecutive months. The percentage of firms reporting increases in employment (19 per cent) exceeded the percentage reporting decreases (16 per cent).
Goldman Sachs chief economist Jan Hatzius says the Philly Fed Business Outlook release is the best predictor of future economic growth.