Philly Fed Manufacturing Index Preview
ORBEX | Oct 17, 2019 05:53AM ET
The Philadelphia Fed manufacturing index report is due for release later today. Economists forecast that manufacturing activity as measured by the index will fall to 7.3 for October.
This comes after the index stood at 12.0 in September. The Philly Fed manufacturing index has rebounded sharply after slipping to 0.3 in June. This was the second-lowest reading on the index. It had previously slipped to zero in February this year.
Get The News You Want
Get The News You Want
The Philly Fed manufacturing index is a regional index from the Philadelphia Federal Reserve Bank. It covers businesses in the regions of eastern and central Pennsylvania, the nine southern counties of New Jersey, and Delaware.
Get The News You Want
Therefore, the report is rather limited in scope. It doesn’t have much impact.
Philly Fed Manufacturing Index, September 2019
Get The News You Want
Get The News You Want
Get The News You Want
However, the results of the Philly Fed Business Outlook Survey (as it is also known as) feeds into the Chicago Fed national activity index. The regional surveys on businesses give an idea into the national manufacturing activity gauge.
Get The News You Want
Investors don’t pay much attention to the report on a monthly basis. The exception being when the index makes a surprise move, such as in February and June this year.
Get The News You Want
Last month’s report showed that businesses were fairly stable. The index slipped from 16.8 to 12.0. After a strong rebound in July, manufacturing activity in the region has been somewhat weaker.
Get The News You Want
Most of the manufacturing sector in the US has been slow. This is a trend also seen on a global level. The slowdown in manufacturing comes because of the late-cycle economic growth.
Get The News You Want
Furthermore, the trade tensions between the US and China and Europe have also made things a bit more complicated.
Get The News You Want
Philly Fed Index Suggests Continued Growth
Get The News You Want
In the report for September, the Philly Fed index showed that the various underlying sub-components were on track. This indicated that although the pace of growth was slower, it still remained in the uptrend.
- General activity and new orders fell during the month
- Indexes for shipments rose alongside employment as well
- Price indexes also showed a strong increase in September
- Future general activity index was moderate but was pointing to growth
Firms participating in the survey noted that there were strong price pressures. The prices had risen by as much as 38% in September. This was up from August’s price increase of 25%.
Get The News You Want
But this was in contrast to the US producer prices index report released a few weeks ago. The data showed that prices at factory gate fell 0.3% on the month. The contrasting figures come due to regional factors.
Get The News You Want
Get The News You Want
One of the main factors currently impacting businesses in the United States is the ongoing trade talks with China. During the period of September–October, there were some positive developments, however.
Get The News You Want
Analysts were somewhat optimistic that the US and China could sort out their differences. It should be noted that in early September, the US slapped new tariffs on China on goods worth over 100 billion.
Get The News You Want
Get The News You Want
However, the recent news reports about some progress on the trade talks and that the deal would come in phases was encouraging.
Get The News You Want
But it is still too early to tell at this point. There is no official confirmation just as yet.
Get The News You Want
Get The News You Want
For the report today, there is a chance that the index could stabilize, coming in above expectations. But as mentioned, the impact will be limited.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.