Philadelphia Fed Survey Reports Manufacturing Conditions Improved in June

PHILADELPHIA--(BUSINESS WIRE)-- Manufacturing conditions in the region improved in June, according to firms responding to this month’s Manufacturing Business Outlook Survey. Indicators for general activity, new orders, and shipments remained positive and increased over their readings in May. Employment and average work hours increased, on balance, at the reporting firms. Firms reported higher prices for raw materials and other inputs in June compared with reported price decreases in recent months. The survey’s indicators of future activity suggest that firms expect continuing growth in the manufacturing sector over the next six months.

Indicators Suggest Growth

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 6.7 in May to 15.2 this month. This is the highest reading for the index since December. The demand for manufactured goods, as measured by the survey’s current new orders index, picked up this month. The new orders index increased 11 points to its highest reading since November. The current shipments index increased 13 points, also the highest reading since November.

Firms’ responses suggest modest expansion in employment in June. The percentage of firms reporting an increase in employees in June (22 percent) exceeded the percentage reporting a decrease (18 percent). The current employment index, however, fell nearly 3 points, to 3.8. Firms reported an overall modest increase in the workweek compared with a decrease last month: The workweek index increased from -5.6 to 4.7.

More Firms Report Input Prices Increases

Over 21 percent of the firms reported higher input prices this month, up significantly from the 5 percent that reported higher prices last month. The prices paid index increased 31 points to its highest reading in 8 months. The prices received index, which reflects firms’ own final goods prices, also increased from -5.4 to 4.8, the first positive reading in six months. The percent of firms reporting higher prices received (14 percent) exceeded the percentage reporting lower prices (10 percent), although 76 percent reported steady prices.

Most Future Indexes Move Higher

Most of the survey’s broad indicators of future growth showed marked improvement this month. The future general activity index increased 6 points to its highest reading since January. The future index for shipments increased 24 points, while the future new orders index increased 13 points. About 31 percent of the firms expect expansion in their workforce over the next six months, while 9 percent expect a reduction. The future employment index was essentially flat, edging just 1 point higher this month. The future capital expenditures index weakened this month, falling 9 points to its lowest reading since March 2013.

Most Firms Expect to Increase Production in the Second Half of 2015

In this month’s special questions, firms were asked to appraise the underlying demand for their products as well as expected production growth for the second half of the year compared with the first half. Firms were also asked to evaluate how production increases would be achieved, by either increases in employment, work hours, or productivity gains.

Summary

The Manufacturing Business Outlook Survey suggests expansion of the region’s manufacturing sector in June. The survey’s indicators for general activity, new orders, and shipments all improved from their readings in May. Firms reported a modest increase in employment this month. A notable share of respondents reported higher prices of inputs this month. For their own manufactured products, more firms reported price increases than reported price decreases. Indicators reflecting firms’ expectations for the next six months improved this month, most notably for future new orders and shipments.

MANUFACTURINGBUSINESS OUTLOOK SURVEYJune 2015			June vs. May										Six Months from Now vs. June
			PreviousDiffusionIndex		Increase		NoChange		Decrease		DiffusionIndex		PreviousDiffusionIndex		Increase		NoChange		Decrease		DiffusionIndex
What is your evaluation of the level of general business activity?			6.7		29.9		51.9		14.7		15.2		33.9		47.5		35.6		7.8		39.7
Company Business Indicators
New Orders			4.0		35.0		40.8		19.7		15.2		31.7		51.5		34.1		6.6		44.9
Shipments			1.0		30.3		52.5		16.0		14.3		32.0		58.1		27.7		2.4		55.8
Unfilled Orders			-1.1		21.7		60.3		18.0		3.7		15.9		30.7		56.7		7.3		23.4
Delivery Times			-3.6		12.2		70.9		16.9		-4.6		5.4		25.0		65.4		3.9		21.1
Inventories			-1.8		22.9		53.1		19.8		3.1		-4.0		27.6		46.4		16.3		11.3
Prices Paid			-14.2		21.1		70.0		4.0		17.2		20.9		46.3		46.9		0.0		46.3
Prices Received			-5.4		14.3		76.1		9.5		4.8		19.4		20.7		62.7		7.9		12.8
Number of Employees			6.7		21.5		58.7		17.7		3.8		21.5		31.3		49.9		9.0		22.3
Average Employee Workweek			-5.6		26.2		52.1		21.4		4.7		9.3		28.3		58.7		2.2		26.1
Capital Expenditures			--		--		--		--		--		16.8		28.4		42.5		20.3		8.1
NOTES:(1) Items may not add up to 100 percent because of omission by respondents.(2) All data are seasonally adjusted.(3) Diffusion indexes represent the percentage indicating an increase minus the percentage indicating a decrease.(4) Survey results reflect data received through June 16, 2015.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150618005292/en/

Federal Reserve Bank of Philadelphia
Daneil Mazone, Media Relations Representative
215-574-7163
[email protected]

Source: Federal Reserve Bank of Philadelphia

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Market Turns Red, But Apeing Surges Ahead: Could This 2,400% ROI Crypto Become the Best Crypto to Buy Now? 
• What Rising Oil Prices During the Iran and USA Conflict Mean for Traders
• Donjones & Associates Announces Renewed 2026 Focus on Relationship-Driven Business Advisory