Thursday, December 20, 2018

Philly Fed Mfg "Indicators Remained Muted" in December

by Bill McBride on 12/20/2018 08:53:00 AM

From the Philly Fed: December 2018 Manufacturing Business Outlook Survey

Manufacturing activity in the region continued to grow but remained subdued, according to results from the December Manufacturing Business Outlook Survey. The survey’s broad indicators were positive, but their movements were mixed this month: The general activity and shipments indicators fell from their readings last month, while the indicators for new orders and employment increased. The firms remained generally optimistic about future growth.

The diffusion index for current general activity decreased from 12.9 in November to 9.4 this month, its lowest reading since August 2016 … The firms continued to report overall higher employment. Over 24 percent of the responding firms reported increases in employment this month, while 6 percent of the firms reported decreases in employment. The current employment index remained positive and edged 2 points higher to 18.3. The current workweek index fell 6 points to 0.5, its lowest reading in 26 months.
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through December), and five Fed surveys are averaged (blue, through November) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through November (right axis).

This suggests the ISM manufacturing index will show expansion again in December, but will likely be lower than in November.