Though marginally positive and arguably no better than flat, the Philadelphia Fed's manufacturing index, at 3.2, managed to post a positive score for a second month in row and the first back-to-back success since the spring of 2022.

Order data highlight March's report: new orders up more than 10 points and back in the positive column at 5.4 with unfilled orders, which had been in uninterrupted contraction since June 2022, up nearly 13 points to plus 1.0. The rise in orders is giving a big lift to the general 6-month outlook which is up more than 30 points to 38.6 for its best score since the easy Covid-comparisons of the summer of 2021.

Also giving a boost to optimism is a substantial easing in input costs, at only 3.7 for a nearly 13 point decline from February and the lowest reading since the Covid shutdown of May 2020. With less cost inflation to pass through, the sample eased selling price inflation to 4.6 for the lowest rate since May last year.

Shipments and inventories rose while delivery times shortened, all likewise positive. The negative in March's report is employment, little changed at minus 9.6 but likely to begin to recover should backlogs extend their recovery.

This report over the past several years has made for the grimmest reading of any US indicator on Econoday's calendar. March's results, the second month in a row that have beaten Econoday's consensus, should give a lift to manufacturing forecasts in the coming weeks. They also help keep the Relative Performance Index in the positive column at 8 to indicate that recent US data on net are coming in slightly ahead of consensus forecasts.

The Philadelphia Fed manufacturing index in March is expected to fall back more than 10 points to minus 5.0 versus February's 5.2 which was better than expected and ended five months of contraction.

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.