US: Philadelphia Fed Business Outlook Survey

Thu Sep 21 07:30:00 CDT 2017

Consensus Consensus Range Previous
General Business Conditions Index - Level 18.0 12.0 to 20.0 18.9

Market Consensus Before Announcement
The Philadelphia Fed's manufacturing sample has been draining the dictionary of superlatives since late last year, showing enormous strength even at the same time that hard data on the factory sector have been mixed. The sample in August reported another month of very sharp growth in new orders and the largest build in backlog orders in 25 years. The Mid-Atlantic states were not affected directly by Hurricane Harvey but prices and delivery times could show pressure as they did in the Empire State report. The September consensus for the Philly Fed index is 18.0 vs August's 18.9.

The general conditions index from this business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey, widely followed as an indicator of manufacturing sector trends, is correlated with the ISM manufacturing index and the index of industrial production.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. By tracking economic data such as the Philly Fed survey, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth so that it won't lead to inflation. The Philly Fed survey gives a detailed look at the manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on market behavior. Some of the Philly Fed sub-indexes also provide insight on commodity prices and other clues on inflation. The bond market is highly sensitive to this report because it is released early in the month and is available before other important indicators.