In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Thursday, March 17, 2011

Philly Fed Survey highest since January 1984

by Calculated Risk on 3/17/2011 10:17:00 AM

From the Philly Fed: March 2011 Business Outlook Survey

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 35.9 in February to 43.4 this month. This is the highest reading since January 1984. The demand for manufactured goods is showing continued strength: The new orders index increased 17 points this month, the sixth consecutive monthly increase.
Firms' responses continue to indicate overall improved labor market conditions. The current employment index fell back 5 points [to 18.2], but for the seventh consecutive month, the percentage of firms reporting an increase in employment (25 percent) is higher than the percentage reporting a decline (7 percent). Over twice as many firms reported a longer workweek (25 percent) than reported a shorter one (12 percent).
That is mostly good news. This was well above the consensus of 35.9.
The concern remains the pickup in both prices paid and received:
Firms continue to report price increases for inputs as well as their own manufactured goods. The prices paid index declined 3 points this month but has still increased 51 points over the past six months. ... Thirty-two percent of firms reported higher prices of their own goods this month, compared with 29 percent in February.
ISM PMI Click on graph for larger image in graph gallery.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through March. The ISM and total Fed surveys are through February.

This early reading suggests the ISM index will be in the 60s again this month. Another very strong report.