US: Philadelphia Fed Business Outlook Survey

February 15, 2018 07:30 CST

Consensus Consensus Range Actual Previous
General Business Conditions Index - Level 21.0 19.0 to 24.7 25.8 22.2

The song remains the same for the Philly Fed where the general business conditions index beat high-end expectations at 25.8 for February. New orders, at 24.5, are surging and unfilled orders, at 14.5, are piling up fast. Hiring is so far keeping up, at 25.2, but the acceleration in shipments is slowing, down nearly 15 points to what is however a still very active 15.5.

Price data are also strong with steady and very strong traction being shown for selling prices, where the index is at 23.9. And price expectations are jumping, both for selling prices six months from now and especially for input costs.

For more than a year, the Philly Fed sample has been reporting the hottest conditions of any regional manufacturing survey in results that did signal, though perhaps too far in advance, what is now an uplift underway in actual government data. Watch later this morning for the industrial production report where the manufacturing component has been surprisingly soft.

Market Consensus Before Announcement
Like Empire State, slight slowing at a still a strong rate of growth was January's result for the Philly Fed manufacturing index which is expected to hold steady in February at a consensus 21.0. Shipments, the workweek and employment have been climbing sharply and are raising questions over the sample's capacity constraints.

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.