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Thursday, July 16, 2020

Philly Fed Manufacturing "continued to expand" in July

by Calculated Risk on 7/16/2020 01:34:00 PM

Note: Be careful with diffusion indexes. This shows a rebound off the bottom - some improvement from May to June to July - but doesn't show the level of activity.

From the Philly Fed: July 2020 Manufacturing Business Outlook Survey

Manufacturing activity in the region continued to expand this month, according to firms responding to the July Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments showed positive readings for the second consecutive month, coinciding with the phased reopening of the economy in our region. The employment index reached positive territory for the first time since March. Although future indicators for general activity, new orders, and shipments declined from last month’s readings, the indexes remained elevated, suggesting that the firms expect overall growth over the next six months.

The diffusion index for current activity edged down 3 points to 24.1 in July, its second consecutive positive reading after reaching long-term lows in the spring … The firms reported increases in manufacturing employment overall for the first time since March, as the current employment index rose 24 points to 20.1 this month, its highest reading since October.
emphasis added
This was above the consensus forecast. 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 (blue, through July), and five Fed surveys are averaged (yellow, through June) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through June (right axis).

These early reports suggest the ISM manufacturing index will increase further in July.