December 2016 Activity picked up in December, according to the firms responding to this month’s Manufacturing Business Outlook Survey. The indexes for general activity, shipments, and employment were all positive this month and increased from their readings last month. Manufacturers were much more optimistic about growth over the next six months. The indexes for future employment and capital spending also showed a notable rise. Most Current Indicators Show Improvement The index for current manufacturing activity in the region increased from a reading of 7.6 in November to 21.5 this month. Nearly 34 percent of the firms reported increases in activity this month, compared with 24 percent last month. The general activity index has remained positive for five consecutive months, and the activity index reading was the highest since November 2014. The current new orders and shipments indexes remained positive, reflecting continued growth. The shipments index increased 3 points, while the new orders index fell 5 points. Both the delivery times and unfilled orders indexes were positive for the second consecutive month, suggesting longer delivery times and an increase in unfilled orders. Firms reported an increase in manufacturing employment and work hours this month. The percentage of firms reporting an increase in employment (17 percent) exceeded the percentage reporting a decrease (11 percent). The current employment index improved 9 points, its first positive reading in 12 months. Firms also reported an increase in work hours this month: The average workweek index, which increased 2 points, has now been positive for two consecutive months. Firms Report Cost Increases Firms reported increases in the prices paid for inputs. The prices paid index increased 2 points following a 21 point increase last month. Thirty percent of the firms reported higher input prices this month. Most firms (66 percent), however, reported that input prices were unchanged. With respect to prices received for firms’ own manufactured goods, the percentage of firms reporting higher prices (16 percent) remained higher than the percentage reporting lower prices (10 percent), but the index for current prices received fell 10 points. Six-Month Indexes Increase Prominently The diffusion index for future general activity increased from a reading of 29.3 in November to 52.6 this month. The index is now at its highest reading since January 2015. Nearly 58 percent of the firms now expect increases in activity over the next six months, compared with 36 percent last month. Indexes for future new orders and shipments also showed notable improvement this month, increasing 14 points and 22 points, respectively. In addition, firms marked up their forecasts for employment increases. The future employment diffusion index increased 16 points. Almost 35 percent of the firms expect increases in employment over the next six months, up from 25 percent in November. A notable share of firms (43 percent) indicated that they will increase capital spending over the next six months, and the future capital spending diffusion index increased 15 points. Higher Health-Care Costs Are Expected In this month’s special questions, firms were asked about their expectations for changes in various input and labor costs for the coming year. The responses indicate that the largest average annual increase is expected to be for health benefits (8 percent). Both wages and nonhealth benefits are expected to rise more than 2 percent. The costs of raw materials and energy are expected to increase by an average of 2.7 percent and 1.1 percent, respectively. Firms were also asked how the expected cost increases for 2017 will compare with this year’s cost changes. For all categories of expenses, the firms forecast, on balance, increases greater than in 2016. Summary Responses to the December Manufacturing Business Outlook Survey suggest a pickup in growth for the region’s manufacturing sector. The indexes for general activity, new orders, shipments, and employment all indicated expansion this month. Firms reported an increase in input price pressures over the past two months, but price increases for manufacturers’ own goods were modest in December. Firms’ optimism about future manufacturing growth improved markedly this month. Firms were much more optimistic about future employment as well as capital spending over the first half of next year. Special Questions (December 2016) 1. What percentage change in costs do you expect for the following categories in 2017? Wages & Health Inter- Benefits & Other Raw mediate Health Nonhealth Nonhealth Energy Materials Goods Wages Benefits Benefits Benefits (%) (%) (%) (%) (%) (%) (%) Decline of 5.0 0.0 0.0 0.0 0.0 0.0 0.0 more than 4% Decline of 0.0 0.0 0.0 0.0 1.7 0.0 0.0 3–4% Decline of 1.7 0.0 0.0 0.0 1.7 1.7 1.7 2–3% Decline of 8.3 3.3 0.0 1.7 3.3 1.7 0.0 1–2% No Change 36.7 21.7 22.0 8.3 8.3 32.8 1.7 Increase of 10.0 13.3 30.5 15.0 1.7 13.8 6.8 1–2% Increase of 16.7 26.7 27.1 58.3 5.0 19.0 16.9 2–3% Increase of 11.7 20.0 11.9 16.7 8.3 19.0 25.4 3–4% Increase of 8.3 1.7 6.8 0.0 8.3 5.2 15.3 4–5% Increase of 0.0 5.0 0.0 0.0 16.7 3.4 8.5 5–7.5% Increase of 0.0 6.7 1.7 0.0 10.0 0.0 11.9 7.5–10% Increase of 1.7 1.7 0.0 0.0 13.3 0.0 5.1 10–12.5% Increase of 0.0 0.0 0.0 0.0 8.3 0.0 1.7 12.5–15% Increase of 0.0 0.0 0.0 0.0 5.0 1.7 3.4 15– 20% Increase of 0.0 0.0 0.0 0.0 8.3 1.7 1.7 more than 20% Median 0.0 2.5 1.5 2.5 6.3 2.0 3.5 Average 1.1 2.7 2.0 2.2 7.9 2.4 5.4 2. How do these expected costs compare with those in 2016? Wages & Health Inter- Benefits & Other Raw mediate Health Nonhealth Nonhealth Energy Materials Goods Wages Benefits Benefits Benefits Higher 42.4 45.8 37.9 46.7 55.9 30.4 69.5 Same 45.8 49.2 58.6 50.0 35.6 64.3 28.8 Lower 11.9 5.1 3.4 3.3 8.5 5.4 1.7 Summary of Returns December 2016 December vs. November Six Months from Now vs. December Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 7.6 33.7 49.4 12.2 21.5 29.3 57.9 32.0 5.3 52.6 Conditions New Orders 18.6 31.6 49.0 17.6 13.9 37.4 55.2 32.9 3.7 51.5 Shipments 19.5 38.5 43.0 16.5 22.0 30.2 57.1 29.5 5.2 51.9 Unfilled Orders 4.1 20.7 63.5 15.0 5.7 8.1 31.3 45.9 13.4 17.9 Delivery Times 6.1 16.3 71.0 8.7 7.6 5.4 23.5 60.3 9.3 14.2 Inventories 13.4 23.0 52.2 21.9 1.1 6.2 33.2 48.5 12.5 20.7 Prices Paid 27.5 30.2 65.6 0.8 29.4 36.7 48.2 47.3 1.2 47.1 Prices Received 16.0 15.7 71.3 9.9 5.8 31.0 38.7 42.8 8.7 30.0 Number of Emp. -2.6 17.3 69.3 10.8 6.4 11.8 34.5 51.5 7.0 27.5 Avg. Emp. Wrkwk. 7.4 20.4 63.0 10.6 9.8 8.1 26.9 58.7 8.5 18.4 Capital Ex. -- -- -- -- -- 19.1 42.8 38.3 9.0 33.8 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through December 12, 2016. November 2016 Results from the November Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand. The indexes for general activity, new orders, and shipments all remained positive this month. Overall, labor market conditions remained weak, however. More firms reported increases in prices in November compared with October. Firms expect continued growth for manufacturing over the next six months, although expectations were less optimistic than last month. New Orders and Shipments Pick Up The index for current manufacturing activity in the region edged down, from a reading of 9.7 in October to 7.6 this month. The index has been positive now for four consecutive months. Other broad indicators showed improvement. The current new orders and shipments indexes increased from their readings in October, by 2 points and 4 points, respectively. Both the delivery times and unfilled orders indexes were positive this month, suggesting longer delivery times and an increase in unfilled orders. The current inventories index moved into positive territory for the first time in 17 months. Firms reported continued weakness in manufacturing employment. The percentage of firms reporting a decrease in employment in November (20 percent) exceeded the percentage reporting an increase (18 percent). The current employment index, which has now remained negative for 11 consecutive months, edged 1 point higher to -2.6. One sign of improvement was the average workweek index, which was positive for the first time in eight months. Firms Report Higher Prices Firms reported increases in the prices paid for inputs and the prices received for their own manufactured goods this month. The prices paid index increased 21 points, to 27.5. Twenty-nine percent of the firms reported higher input prices this month, compared with 15 percent last month. Most firms (69 percent), however, reported that input prices were unchanged. With respect to prices received for firms’ own manufactured goods, more firms reported higher prices this month. Although the largest percentage of firms (75 percent) reported no change in prices, 20 percent of the firms reported price increases for their own products this month, compared with 6 percent last month. The index for current prices received increased 20 points. Expectations Are Still Positive but Moderated Firms remained optimistic about overall business conditions over the next six months, but the survey’s six-month general activity index moderated 3 points from last month. Nearly 36 percent of the firms expect increases in activity over the next six months, lower than the 45 percent that expected increases last month. The indexes for future new orders and shipments also fell from their October readings, by 2 points and 11 points, respectively. The future employment index also fell 14 points. One-quarter of the manufacturers said they expect to expand employment over the next six months, while 13 percent expect to reduce employment. Firms Expect Price Increases to Nearly Match the Rate of Inflation In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. The median forecast was for an increase in their own prices of 2 percent, up from a 1 percent forecast in the third quarter. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 2.3 percent, which was slightly higher than the 2 percent that was forecast last quarter. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise at a pace of 3 percent over the next four quarters. Summary Responses to the November Manufacturing Business Outlook Survey suggest continued modest growth in the region’s manufacturing sector. The indexes for general activity, new orders, and shipments all indicated expansion. The survey’s price indexes were notably higher this month. Firms reported continued reductions in overall employment this month, although average work hours increased. Firms remained generally optimistic about increases in overall business activity over the next six months, although forecasts were less optimistic than in October. Special Questions (November 2016) Over the next year (2016:Q4 to 2017:Q4), please list your expected annual percent change with respect to the following: Percent Change over Next Year* ____________________________________ Fourth Third Quarter Quarter Forecast Forecast 1. For your firm: Prices your firm will receive (for its own goods and services sold). 2.0 1.0 Compensation your firm will pay per employee (for wages and benefits). 3.0 3.0 2. For your employees: Prices your employees will pay (for goods and services where they live). 2.0 2.0 3. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.3 2.0 For the next 10 years (2016 through 2025), what is your expected annual average percent change with respect to the following: 4. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.7 2.5 * Numbers represent median forecasts. Summary of Returns November 2016 November vs. October Six Months from Now vs. November Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 9.7 23.7 60.2 16.1 7.6 32.6 35.9 49.6 6.6 29.3 Conditions New Orders 16.3 36.4 45.9 17.7 18.6 39.3 47.2 39.2 9.8 37.4 Shipments 15.3 34.8 49.3 15.4 19.5 40.8 42.4 43.5 12.2 30.2 Unfilled Orders -0.7 15.6 72.9 11.5 4.1 15.3 21.1 65.6 13.0 8.1 Delivery Times -0.3 10.6 84.9 4.5 6.1 6.2 17.0 69.9 11.6 5.4 Inventories -12.8 28.4 56.0 15.0 13.4 14.0 21.9 56.5 15.7 6.2 Prices Paid 7.0 28.8 69.0 1.3 27.5 42.4 40.1 55.4 3.4 36.7 Prices Received -3.7 19.6 75.0 3.5 16.0 29.2 33.6 61.4 2.6 31.0 Number of Emp. -4.0 17.5 61.6 20.1 -2.6 25.9 25.1 56.7 13.3 11.8 Avg. Emp. Wrkwk. -2.2 20.5 62.1 13.2 7.4 15.7 20.0 68.0 11.9 8.1 Capital Ex. -- -- -- -- -- 21.2 25.0 65.3 5.9 19.1 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through November 14, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: November 17, 2016, at 8:30 a.m. ET. October 2016 Results from the October Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve. Indexes for general activity, new orders, and shipments were all positive this month. But firms reported continued weakness in overall labor market conditions. Firms expect continued growth for manufacturing over the next six months and are becoming more optimistic about employment expansion. New Orders Pick Up, but Employment Still Not Growing The index for current manufacturing activity in the region edged down, from a reading of 12.8 in September to 9.7 this month. The index has now been positive for three consecutive months. Other broad indicators showed notable improvement. The new orders index improved markedly this month, increasing from 1.4 in September to 16.3 in October. The percentage of firms reporting increases in new orders this month rose to 40 percent from 30 percent last month. The current shipments index also improved, rising 24 points to 15.3. The delivery times, unfilled orders, and inventories indexes remained weak, however, with all registering negative readings, although they were less negative than in September. Firms reported continued weakness in manufacturing employment. The percentage of firms reporting a decrease in employees in October (17 percent) exceeded the percentage reporting an increase (13 percent). The current employment index edged up slightly to -4.0. The percentage of firms reporting a shorter workweek (19 percent) was slightly greater than the percentage reporting a longer workweek (17 percent), and the average workweek index remained negative at -2.2. Firms Report Moderated Price Pressures Although still positive, the prices paid index decreased 14 points to 7.0. Although nearly 73 percent of the firms reported that input prices were unchanged, the percentage of firms reporting price increases (15 percent) exceeded the percentage reporting price decreases (8 percent). With respect to prices received for firms’ own manufactured goods, the largest percentage of firms (81 percent) reported no change in prices. The percentage of firms reporting price decreases for their own products (9 percent) exceeded the percentage reporting price increases (6 percent). The index for current prices received declined 13 points, to -3.7. Expectations Are Still Positive, and Employment Forecast Improves Overall, firms remain optimistic about business conditions over the next six months, and prospects for employment continue to be upbeat. The diffusion index for future activity declined from 37.5 in September to 32.6 in October but remains slightly above its average reading over the past 12 months. Nearly 45 percent of the firms expect increases in activity over the next six months, and 52 percent expect increases in new orders. The future employment index improved for the fourth consecutive month, increasing slightly from 24.9 to 25.9. Nearly 32 percent of the firms said they expected to expand employment over the next six months, while 6 percent expected to reduce employment. Lower Rates of Utilization Are in Evidence For this month’s special questions, manufacturers were asked about current capacity utilization rates compared with the same time last year. The average capacity utilization rate reported was nearly 74 percent. The responding firms indicated, however, that the current rate was lower than that from one year earlier (75 percent). For the U.S., the capacity utilization rate for the manufacturing sector, overall, is estimated to be almost 75 percent, slightly lower than one year ago. Firms were also asked about their plans for different categories of capital spending next year. For only one category (noncomputer equipment), the share of firms expecting to increase spending was higher than the share of firms expecting to decrease spending. More firms expected decreases than expected increases next year for software, computer and related hardware, structures, and energy-saving investments. Firms with higher plant utilization rates were more likely to report plans to increase investments. For example, the current utilization rate among firms expecting to increase spending on structures (83 percent) was notably higher than those expecting to decrease spending on structures (70 percent). Summary Responses to the October Manufacturing Business Outlook Survey suggest continued improvement in the region’s manufacturing sector. Indexes for general activity, new orders, and shipments all indicated expansion this month. However, firms reported continued reductions in overall employment. Firms remained optimistic about increases in overall business activity over the next six months. Special Questions (October 2016) 1. Which of the following best characterizes your plant’s current capacity utilization rate (current and last year)? Same Time Last Year Current (% of reporters) (% of reporters) Capacity Utilization Rate* Less than 60% 17.2 13.6 60%-70% 20.7 18.6 70%-80% 36.2 35.7 80%-90% 13.8 18.6 Greater than 90% 12.2 13.6 Average utilization rate 73.5 75.3 U.S. utilization rate** 75.3 75.9 2. Do you expect the following capital expenditure categories over the next year (2017) to be higher than, the same, or lower than in the current year? Higher Same Lower (% of (% of (% of Diffusion reporters) reporters) reporters) Index Noncomputer equipment 34.5 43.1 25.9 8.6 Software 25.9 46.6 27.6 -1.7 Computer & related hardware 20.7 56.9 24.1 -3.4 Structures 17.2 53.4 27.6 -10.3 Energy-saving investments 10.3 65.5 20.7 -10.3 Other 0.0 36.2 10.3 -10.3 Exhibit 1: Average capacity utilization rates for firms in same categories as above. Capacity Capacity Capacity Utilization Utilization Utilization Rate for Higher Rate for Same Rate for Lower Spending in Spending in Spending in Category Category Category Noncomputer equipment 78.0 71.5 71.8 Software 79.3 75.1 65.7 Computer & related hardware 76.5 75.6 68.3 Structures 83.1 73.0 70.0 Energy-saving investments 85.8 74.0 65.8 Average 80.5 73.8 68.3 *Firms provided more specific rates of utilization than shown in the provided ranges. **Capacity Utilization: U.S. Manufacturing (NAICS) "Current" shows the rate for September 2016; "Same Time Last Year" shows the rate for October 2015. Sources: Federal Reserve Board, Haver Analytics Summary of Returns October 2016 October vs. September Six Months from Now vs. October Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 12.8 32.1 40.3 22.4 9.7 37.5 44.8 27.4 12.2 32.6 Conditions New Orders 1.4 40.4 33.7 24.1 16.3 36.7 51.7 30.2 12.4 39.3 Shipments -8.8 38.5 33.7 23.3 15.3 30.5 52.7 26.8 11.9 40.8 Unfilled Orders -10.8 17.7 62.2 18.5 -0.7 9.7 25.3 57.5 10.0 15.3 Delivery Times -9.3 10.4 73.7 10.7 -0.3 8.5 17.0 66.0 10.8 6.2 Inventories -26.2 15.2 53.4 28.1 -12.8 6.3 27.3 49.5 13.3 14.0 Prices Paid 20.6 14.7 72.6 7.7 7.0 42.1 44.7 48.2 2.3 42.4 Prices Received 9.7 5.7 81.1 9.4 -3.7 33.4 36.7 51.0 7.5 29.2 Number of Emp. -5.3 12.5 69.3 16.5 -4.0 24.9 31.7 57.3 5.8 25.9 Avg. Emp. Wrkwk. -11.7 17.1 61.7 19.3 -2.2 9.8 27.3 51.7 11.5 15.7 Capital Ex. -- -- -- -- -- 8.6 33.3 47.6 12.1 21.2 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey data reflect information received through October 17, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: October 20, 2016, at 8:30 a.m. ET. September 2016 Results from the Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve in September. Indicators for general activity and new orders were positive and increased from their readings last month. Indicators for shipments and employment, however, were negative, suggesting weaker performance for the sector. Firms remain optimistic about growth over the next six months and were more positive about increasing employment. Activity Picks Up, but Employment Still Weak The index for current manufacturing activity in the region increased 11 points to 12.8. For the first time since August of last year, the index has registered two consecutive positive readings. The new orders index also improved, increasing from -7.2 to 1.4. The percentage of firms reporting increases in new orders this month edged up to 30 percent from 27 percent last month. Other current indicators suggested weaker conditions, however. The current shipments index declined from 8.4 in August to -8.8 this month. Both the delivery times and unfilled orders indexes remained weak, with both indexes staying in negative territory. Firms also reported declines in inventories this month: The inventories index declined from -9.2 to -26.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year. Firms reported continued weakness in manufacturing employment. The percentage of firms reporting a decrease in employees in September (17 percent) exceeded the percentage reporting an increase (12 percent). The current employment index remained negative for the ninth consecutive month, although it improved from -20.0 in August to -5.3 this month. Firms reported overall decreases in the average workweek: The percentage of firms reporting a shorter workweek (23 percent) was greater than the percentage reporting a longer workweek (11 percent). Most Firms Report Steady Prices, but Price Indexes Edge Up Input prices continued to increase for many of the reporting manufacturers: The prices paid index edged 1 point higher, to 20.6, its sixth consecutive positive reading. Although nearly 71 percent of the firms reported that input prices were unchanged, the percentage of firms reporting price increases (23 percent) exceeded the percentage reporting price decreases (3 percent). With respect to prices received for firms’ own manufactured goods, the largest percentage of firms (75 percent) reported no change in prices. The percentage of firms reporting price increases for their own products (16 percent) exceeded the percentage reporting price decreases (6 percent) for the seventh consecutive month. The index for current prices received edged 3 points higher, to 9.7. Expectations Are Still Positive, and the Employment Forecast Improves Overall, firms remain optimistic about business conditions over the next six months and were more upbeat about prospects for employment. The diffusion index for future activity declined from 45.8 in August to 37.5 in September but remains slightly above its average reading over the past 12 months (see Chart 1). Nearly 50 percent of the firms expect increases in activity over the next six months, and 54 percent expect increases in new orders. Firms are now forecasting longer delivery times as well as increases in inventories and unfilled orders. The future employment index increased sharply this month, from 12.9 to 24.9. Nearly 34 percent of the firms said they expected to expand employment over the next six months, while 9 percent expected to reduce employment. Weak Economic Conditions Cited as Major Reason for Shifted Capital Spending Goal In this month’s special questions, firms were asked about spending plans related to achieving company growth. Modernization of manufacturing processes (64 percent) was the most frequently cited goal of capital spending, followed by expansion of facilities (30 percent). Fewer firms, but still notable percentages, indicated other goals to achieve growth: launching of new units (19 percent), acquisition of other companies (17 percent), and the purchase of other companies’ assets (16 percent). Internationalization and joint ventures were cited by slightly smaller percentages: 13 percent and 12 percent, respectively. Firms were also asked about how these same cited goals had changed over the past five years. Over 59 percent of the firms indicated that modernization had become more important, while only 4 percent indicated it was less important. On balance, expansion of facilities had become less important: Thirty-three percent of the respondents cited it as less important compared with 28 percent indicating it was more important. Firms cited weak economic conditions as the most important reason capital spending for either expansion of facilities or modernization had become “less important” over the past five years. Fifteen percent of the firms cited fewer profitable opportunities. Smaller but notable percentages of firms gave other reasons: policy uncertainty (12 percent), regulations (12 percent), and tax policies (7 percent). Summary The Manufacturing Business Outlook Survey suggests continued growth of the region’s manufacturing sector in September. Indexes for both general activity and new orders indicated expansion. However, firms reported an overall reduction in shipments this month, and employment indicators suggested continued weakness. Firms remained optimistic about increases in overall business activity over the next six months and were more upbeat with regard to their employment forecasts. Special Questions September 2016 1. Which of the following best characterizes your company's spending plan goals with regard to achieving future growth?* Percentage of Respondents Indicating Goal Modernization of manufacturing processes 63.8% Expansion of manufacturing facilities 30.4% Launching of new units 18.8% Acquisition of another company 17.4% Purchase of other companies' assets 15.9% Internationalization 13.0% Joint ventures 11.6% Other 5.8% *Percentages do not sum to 100 because firms could choose more than one category. Over 97 percent of the surveyed firms answered the special questions. 2. Over the past five years, how have the above goals changed in importance? More Same Less Diffusion Important Importance Important Index* Modernization of manufacturing 59.4% 33.3% 4.3% 55.1 processes Expansion of manufacturing 27.5% 33.3% 33.3% -5.8 facilities Launching of new units 27.5% 42.0% 18.8% 8.7 Acquisition of another company 24.6% 31.9% 26.1% -1.4 Purchase of other companies' assets 20.3% 37.7% 26.1% -5.8 Internationalization 10.1% 58.0% 13.0% -2.9 Joint ventures 17.4% 31.9% 26.1% -8.7 Other 0.0% 14.5% 7.2% -7.2 *The diffusion index is computed as the percentage responding "more important" minus percentage responding "less important." 3. For firms that indicated capital spending for expansion of facilities or the modernization of processes is "less important," which of the following are the reasons? Percentage of All Respondents Indicating Expansion or Modernization Goal Was Less Important Weak economic conditions 24.6% Fewer profitable opportunities 14.5% Policy uncertainty 11.6% Regulations 11.6% Tax policies 7.2% Other 5.8% Summary of Returns September 2016 September vs. August Six Months from Now vs. September Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 2.0 31.7 46.1 18.9 12.8 45.8 49.5 29.9 12.0 37.5 Conditions New Orders -7.2 30.0 38.5 28.7 1.4 44.9 53.6 25.3 16.9 36.7 Shipments 8.4 23.5 41.0 32.4 -8.8 51.0 49.3 26.5 18.8 30.5 Unfilled Orders -15.0 13.9 60.3 24.7 -10.8 3.2 22.5 59.5 12.8 9.7 Delivery Times -3.8 6.3 76.0 15.6 -9.3 -2.2 19.5 62.8 11.0 8.5 Inventories -9.2 8.1 54.0 34.3 -26.2 -7.3 27.2 46.2 20.9 6.3 Prices Paid 19.7 23.4 70.5 2.8 20.6 29.1 42.5 49.3 0.4 42.1 Prices Received 7.1 15.7 75.4 5.9 9.7 13.9 38.6 54.2 5.2 33.4 Number of Emp. -20.0 11.7 68.4 17.1 -5.3 12.9 33.6 51.4 8.8 24.9 Avg. Emp. Wrkwk. -11.5 11.0 64.1 22.7 -11.7 19.9 26.1 52.1 16.3 9.8 Capital Ex. -- -- -- -- -- 19.2 22.5 53.6 13.9 8.6 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey data reflect information received through September 12, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: September 15, 2016, at 8:30 a.m. ET. August 2016 Firms responding to the Manufacturing Business Outlook Survey suggest that growth was positive but tenuous this month. The diffusion index for current general activity moved from a negative reading to a marginally positive reading, while the indicators for new orders and employment suggested continued general weakness in business conditions. Of the current broad indicators, the diffusion index for shipments recorded the strongest reading. The respondents were confident about future growth, as their forecasts of future activity showed notable improvement. Current Indicators Remain Weak The index for current manufacturing activity in the region rose 5 points to only 2.0 in August, as the share of firms reporting an increase in activity (35 percent) barely exceeded the share reporting a decrease (33 percent). This is only the third positive reading of the index in the current year. The current new orders index dropped significantly from a reading of 11.8 in July to -7.2 in August. The percentage of firms reporting an increase in new orders (27 percent) was less than 1 point lower than last month; however, the percentage of firms reporting a decrease (34 percent) was 18 points higher than last month. The current shipments index rose slightly, from 6.3 to 8.4. The percentage of firms reporting an increase in shipments (35 percent) was 6 points higher than last month. The indexes for unfilled orders and delivery times fell into negative territory, recording values of -15.0 and -3.8, respectively. The index for inventories dropped from -4.3 to -9.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year. The survey’s indicators of employment weakened considerably. The employment index fell 18 points to -20.0, which is its largest negative reading for the current year. Although 67 percent of the firms reported no change in employment this month, the percentage reporting decreases (25 percent) significantly exceeded the percentage reporting increases (5 percent). The workweek index also fell, from -3.6 to -11.5. Twenty-five percent of the firms reported a decrease in average work hours, and only 13 percent reported an increase. Price Inflation Rises Firms indicated that there was a broadening of price increases both for inputs and for their own goods. The prices paid index rose 10 points, to 19.7, in August. Twenty percent of the respondents reported increases in prices paid, and none reported decreases. The prices received index rose 7 points, to 7.1. Eighteen percent of the respondents indicated increases in prices received, while 11 percent reported decreases. Respondents See Growth Ahead The survey’s index of future manufacturing activity rose 12 points to 45.8 in August, strongly indicating that the current weakness is expected to be temporary. This index is at its highest reading since January 2015 (see Chart). Fifty-four percent of the firms expect an increase in activity over the next six months, up from 46 percent last month. Only 8 percent expect a decline, down from 12 percent last month. The future indexes for new orders and shipments also increased, rising 16 points and 24 points, respectively. The future employment index held relatively steady at 12.9. Firms Expect Own Price Increases to Lag General Inflation In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and general inflation over the next four quarters. The median forecast was for an increase in their own prices of 1 percent. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise at a much higher pace of 3 percent over the next four quarters. When asked about the average rate of inflation for consumers over the next 10 years, the firms’ median forecast was 2.5 percent. These median responses were identical to those from May when the same questions were last asked, with one exception: In May, the median price forecast for firms’ own prices was higher, at 2 percent. Summary The August Manufacturing Business Outlook Survey indicated, on balance, that growth in the region’s manufacturing sector is currently weak. The survey’s indicators for current general activity and shipments were positive, while the indicators for new orders and employment were negative. The indicators for future conditions rose sharply from last month’s readings, however. Special Questions (August 2016) Over the next year (2016:Q3 to 2017:Q3), please list your expected annual percent change with respect to the following: Percent Change* 1. For your firm: Prices your firm will receive (for its own goods and services sold). 1.0 Compensation your firm will pay per employee (for wages and benefits). 3.0 2. For your employees: Prices your employees will pay (for goods and services where they live). 2.0 3. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.0 For the next 10 years (2016 through 2025), what is your expected annual average percent change with respect to the following: Percent Change* 4. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.5 *Numbers represent median forecasts. Summary of Returns August 2016 August vs. July Six Months from Now vs. August Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -2.9 35.0 32.0 33.0 2.0 33.7 53.9 28.9 8.1 45.8 Conditions New Orders 11.8 27.0 38.6 34.2 -7.2 29.2 56.2 28.3 11.3 44.9 Shipments 6.3 35.1 34.6 26.7 8.4 27.2 60.0 30.3 9.0 51.0 Unfilled Orders 1.9 12.4 54.6 27.4 -15.0 12.1 17.1 64.6 13.9 3.2 Delivery Times 1.3 12.3 67.1 16.0 -3.8 0.5 11.1 73.4 13.3 -2.2 Inventories -4.3 18.7 50.4 27.8 -9.2 0.3 19.2 52.2 26.6 -7.3 Prices Paid 9.9 19.7 79.0 0.0 19.7 26.4 32.0 62.4 2.8 29.1 Prices Received 0.3 17.9 71.1 10.8 7.1 24.1 24.7 63.1 10.8 13.9 Number of Emp. -1.6 5.0 67.4 25.0 -20.0 12.8 26.7 57.7 13.8 12.9 Avg. Emp. Wrkwk. -3.6 13.4 60.6 25.0 -11.5 8.4 25.2 69.1 5.3 19.9 Capital Ex. -- -- -- -- -- 15.1 27.1 58.7 7.9 19.2 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey data reflect information received through August 15, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: August 18, 2016, at 8:30 a.m. ET. July 2016 Manufacturing activity in the region fell slightly in July, according to firms responding to this month’s Manufacturing Business Outlook Survey. Although the indicator for current general activity turned negative, indicators for new orders and shipments were positive. Employment was flat at the reporting firms this month. Firms reported higher prices paid for materials and other inputs in July, but prices received for manufactured goods were relatively steady. The survey’s index of future activity improved slightly, and firms expect growth in new orders and shipments over the next six months. Indicators for Current Growth Were Mixed The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell from 4.7 in June to -2.9 this month. For nine of the past 11 months, this diffusion index has been negative. Twenty-two percent of the firms reported an increase in activity, 3 points lower than last month, and the percent of firms that reported decreases rose from 20 to 25. Fifty-one percent of the firms reported steady activity this month, similar to the share that reported steady activity last month. Demand for manufactured goods, as measured by the survey’s current new orders index, expanded in July. The new orders index rose from -3.0 in June to 11.8 this month, and the current shipments index increased as well, from -2.1 to 6.3. The share of firms reporting an increase in new orders was 28 percent, up 7 points from last month, and 53 percent reported no change in new orders. The share of firms reporting an increase in shipments was 29 percent, up 3 points from last month, and 48 percent reported no change in shipments. Both unfilled orders and the delivery times were relatively flat this month. Firms’ responses suggest steady employment in July. The share of firms reporting no change in employees in July was 77 percent, up from 72 percent in June, and the current employment index rose from a reading of -10.9 last month to -1.6 this month. While firms reported a slight decline in the workweek in July, the -3.6 reading for this indicator is an improvement over June’s reading of -13.1. Firms Reported Steady Prices for Their Own Goods Seventy-two percent of the firms reported no change in input prices this month, up from the 68 percent that reported no change last month. The prices paid index fell 13 points and is now at 9.9. With respect to prices received for their own manufactured goods, 76 percent of the firms reported no change, almost unchanged from June, and the prices received index fell from 3.9 to 0.3. Future Indexes Signal Optimism The survey’s broad indicator of future growth moved slightly higher this month: The diffusion index for future general activity increased 4 points to 33.7, which is close to its average of 35.9 during the past five years. Forty-six percent of the firms expect an increase in activity over the next six months, almost unchanged from last month, but the percentage of firms that expect a decrease in activity fell from 16 percent to 12 percent. The future index for new orders held steady at 29.2, and the future shipments index fell 5 points, to 27.2. While both of these specific company- level diffusion indexes are below their five-year averages of 38.5 and 37.1, respectively, they show that firms are optimistic about prospects for growth. The future employment index rose slightly, to 12.8, in July. Twenty-four percent of the firms expect to expand their workforce over the next six months. Special Questions About Seasonal Factors In this month’s special questions, firms were asked to assess the importance of seasonal factors in production, seasonal changes in their production by month, and whether these seasonal factors have changed in importance over time. Most firms (62 percent) reported that seasonal factors were not significant. Of the firms that reported significant seasonal patterns, the most common pattern was increased production during the spring and fall and decreased activity in midsummer and during the winter months. This year, 57 percent of the firms with seasonal patterns reported that seasonal effects have not changed; 30 percent saw seasonal patterns as less important. Summary This month’s Manufacturing Business Outlook Survey gave mixed signals for current activity in the region’s manufacturing sector. The indicator for general activity was negative, but the indicators for new orders and shipments were positive. Employment and output prices were reported as steady. Firms’ expectations for the next six months showed an improvement in the outlook for general activity. Summary of Returns July 2016 July vs. June Six Months from Now vs. July Prev. Prev. Diff.Inc. No ch Dec. Diff. Diff. Inc. No chDec. Diff. Index Index Index Index General Business 4.7 22.2 51.0 25.1 -2.9 29.8 45.5 32.2 11.8 33.7 Conditions New Orders -3.0 27.6 52.7 15.8 11.8 29.9 43.7 32.5 14.5 29.2 Shipments -2.1 29.2 47.9 22.9 6.3 32.2 41.4 34.5 14.2 27.2 Unfilled Orders -12.6 15.5 67.5 13.6 1.9 -0.6 18.0 66.5 5.9 12.1 Delivery Times -8.3 10.2 78.7 8.9 1.3 2.4 8.7 71.3 8.2 0.5 Inventories -9.9 18.0 53.5 22.3 -4.3 -3.1 22.0 45.5 21.6 0.3 Prices Paid 23.0 17.2 71.9 7.3 9.9 37.8 29.7 56.1 3.3 26.4 Prices Received 3.9 10.8 76.1 10.6 0.3 16.5 28.4 54.5 4.3 24.1 Number of Emp. -10.9 9.4 76.9 11.0 -1.6 11.2 23.6 56.8 10.7 12.8 Avg. Emp. Wrkwk.-13.1 17.4 57.3 21.0 -3.6 11.0 18.1 62.6 9.7 8.4 Capital Ex. -- -- -- -- -- 7.1 22.3 60.5 7.2 15.1 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey data reflect information received through July 18, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: July 21, 2016, at 8:30 a.m. ET. June 2016 Firms responding to the Manufacturing Business Outlook Survey reported little growth this month. Though the indicator for general activity was positive in June, other broad indicators continued to reflect general weakness in business conditions. The indicators for both employment and work hours remained negative. Forecasts of future activity weakened from last month but continued to suggest that manufacturers expect growth over the next six months. Current Indicators Are Mixed The diffusion index for current activity rose almost 7 points, to 4.7, and returned to positive territory this month after two consecutive negative readings. About one-quarter of the firms reported increases in activity, similar to last month, while 20 percent of the firms reported decreases, down from 26 percent last month. More than 52 percent of the firms reported steady activity. The current new orders and shipments indexes, however, remained slightly negative, slipping 1 and 2 points, respectively. Nearly 55 percent of the respondents reported no change in new orders this month, and 45 percent reported no change in shipments. As with the other broad indicators this month, the unfilled orders, delivery times, and inventories indexes all remained negative. The survey’s labor market indicators suggest continued weak employment conditions. The employment index was negative for the sixth consecutive month, falling from -3.3 in May to -10.9 in June. Though nearly 72 percent of the firms reported no change in employment this month, the percentage reporting decreases (20 percent) exceeded the percentage reporting increases (9 percent). The average workweek index edged up slightly but remained negative, at -13.1. More Firms Report Input Price Increases Though most firms (68 percent) reported no changes in prices for inputs, more than 26 percent of the firms reported increases in input prices this month. The prices paid index rose for the fourth consecutive month, climbing 7 points to 23.0. The respondents reported moderating prices for their own goods, as the prices received index decreased from 14.8 in May to 3.9 in June. The percentage of firms indicating an increase (14 percent) edged out the percentage of firms indicating a decrease (11 percent), and three-quarters of the firms reported no change. Future Growth Expectations Soften but Remain Positive The survey’s future indicators decreased for the second consecutive month but continue to suggest that firms expect growth through the end of the year. The diffusion index for future general activity declined from 36.1 in May to 29.8 in June. More than 46 percent of the firms expect an increase in activity over the next six months, while 16 percent expect a decline. Indicators for future new orders and shipments also declined, falling 10 points and 6 points, respectively. The future employment index edged down slightly, to 11.2. Almost 26 percent of the surveyed firms expect to increase employment levels over the next six months, a slight improvement from last month. Firms also foresee increases in prices: The indexes for future prices paid and received both rose. Most Firms Expect Increased Production in the Third Quarter In this month’s special questions, firms were asked to estimate their total production growth for the second quarter ending this month along with expected growth for the third quarter. The share of firms reporting increases in second- quarter production (44 percent) was slightly greater than the share reporting decreases (40 percent). Looking ahead to the third quarter, 45 percent of the firms forecast acceleration in the rate of production, while 26 percent of the firms forecast deceleration. For those firms expecting to accelerate production, respondents indicated this would be achieved by increasing the productivity of current workers (42 percent) rather than increasing work hours of current staff (29 percent) or hiring additional workers (23 percent). Summary This month’s Manufacturing Business Outlook Survey suggests tepid growth of the region’s manufacturing sector. The survey’s indicator for general activity returned to positive territory, but indicators for new orders, shipments, and employment remained negative. Though indicators for future conditions fell from last month’s readings, firms continued to expect future growth. Special Questions (June 2016) 1. How will your firm's total production for the second quarter compare with that of the first quarter?* Change attributable to: % of firms Seasonal Business Other factors conditions Increase 44.4% 23.6% 16.7% 2.8% No change 13.9% Decrease 40.3% 9.7% 29.2% 1.4% 2. For the upcoming third quarter, how much growth do you expect at your plant compared with the second quarter? % of firms Subtotals Significant acceleration 1.4% Some acceleration 26.1% Slight acceleration 17.4% Subtotal 44.9% No change 29.0% Slight deceleration 13.0% Some deceleration 11.6% Significant deceleration 1.4% Subtotal 26.1% 3. If you expect to increase production in the third quarter, how will this be accomplished? % of firms Hiring additional workers 22.6% Increasing work hours of current staff, without hiring additional workers 29.0% Increasing productivity of current staff, without hiring additional workers 41.9% Other 6.5% *Subtotals may not sum to totals because of incomplete answers. Summary of Returns June 2016 June vs. May Six Months from Now vs. June Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -1.8 24.7 52.1 20.0 4.7 36.1 46.2 31.7 16.4 29.8 Conditions New Orders -1.9 20.6 54.7 23.6 -3.0 39.9 45.6 31.0 15.7 29.9 Shipments -0.5 26.3 45.3 28.4 -2.1 37.9 45.5 33.2 13.3 32.2 Unfilled Orders -8.8 6.3 74.8 18.9 -12.6 14.5 12.7 67.4 13.4 -0.6 Delivery Times -14.6 9.8 71.1 18.1 -8.3 -2.2 10.1 74.0 7.7 2.4 Inventories -2.5 16.9 52.4 26.8 -9.9 -12.0 21.1 46.3 24.2 -3.1 Prices Paid 15.7 26.5 68.2 3.6 23.0 24.8 39.3 51.9 1.5 37.8 Prices Received 14.8 14.4 75.2 10.5 3.9 10.5 28.8 53.1 12.3 16.5 Number of Emp. -3.3 8.7 71.6 19.6 -10.9 12.0 25.9 51.8 14.7 11.2 Avg. Emp. Wrkwk. -15.1 11.5 61.5 24.7 -13.1 13.7 19.1 65.3 8.1 11.0 Capital Ex. -- -- -- -- -- 23.6 19.7 59.6 12.7 7.1 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey data reflect information received through June 13, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: June 16, 2016, at 8:30 a.m. ET. May 2016 Firms responding to the Manufacturing Business Outlook Survey continued to report tenuous growth this month. The indicator for general activity was essentially unchanged in May and remained slightly negative. Other broad indicators also reflected general weakness in business conditions. The indicator for employment improved but remained negative. Manufacturers’ forecasts of future activity tempered slightly from last month, overall, but continue to suggest confidence in future growth. Current Indicators Remain Weak The diffusion index for current activity was essentially unchanged at -1.8 this month. The index has registered a negative reading in eight of the last nine months. The current new orders index decreased for the second consecutive month, from 0.0 to -1.9 this month. Conversely, the current shipments index rose 10 points; however, the percentage of firms reporting a decline in shipments narrowly exceeded the percentage reporting an increase. As with the other broad indicators this month, the unfilled orders and delivery time indexes both remained in negative territory. The indicator for inventories rose notably to its highest reading in nine months but still registered a negative reading. The survey’s indicators of employment reflect similar weakness in May. Despite improving 15 points this month, the employment index registered its fifth consecutive negative reading, at -3.3. More than 69 percent of the firms reported no change in employment, but the percentage reporting decreases (17 percent) exceeded the percentage reporting increases (14 percent). After a sharp drop last month, the average workweek index ticked up 1 point but remained negative. Prices for Inputs and Goods Rise Slightly Firms reported increases in prices for their own goods, on balance. The prices received index doubled from last month, rising to 14.8. Slightly more than 20 percent of the respondents indicated increases in prices received; however, nearly 74 percent reported no change in prices received this month. Input prices also rose, on balance, as 24 percent of the firms noted increases. The prices paid index was positive for the second consecutive month, edging up from 13.2 to 15.7. Outlook Remains Positive The survey’s future indicators receded from last month’s readings but continue to suggest that the current weakness is expected to be temporary. The diffusion index for future general activity fell from a 15-month high of 42.2 in April to 36.1 in May. Despite the decrease, the future activity index remains above lower levels from the first months of the year. Slightly more than 47 percent of the firms expect an increase in activity over the next six months, down from 51 percent last month, while 11 percent expect a decline. The future indexes for new orders and shipments also decreased but remained elevated, falling 9 points and 3 points, respectively. The future employment index edged down 2 points, to 12.0. Similar to last month, almost 23 percent of the surveyed firms expect to increase employment levels over the next six months. The indexes for future prices paid and received decreased 12 points each. Firms Expect Their Own Price Increases to Match the Rate of Inflation In this month’s special questions, firms were asked to forecast the changes in prices of their own products over the next four quarters. The median forecast was for an increase in their own prices of 2 percent, a rate of increase in line with the rate of inflation firms expect that the workers they employ regionally as well as the average U.S. consumer will face (see Special Questions). Firms expect their own per employee compensation costs (wages plus benefits) to rise by 3 percent over the same period. When asked about the average rate of inflation for consumers over the next 10 years, the firms’ median forecast was 2.5 percent. The median responses were unchanged from February, when the quarterly questions were last asked, with one exception: In February, the median price forecast for firms’ own prices was lower, at 1.3 percent. Summary This month’s Manufacturing Business Outlook Survey suggests essentially no growth of the region’s manufacturing sector. The survey’s indicators for general activity, new orders, shipments, and employment all remained negative. Though indicators for future conditions fell from last month, expectations for future growth continue to be positive. Special Questions (May 2016) Over the next year (2016:Q2 to 2017:Q2), please list your expected annual percent change with respect to the following: Percent Change* 1. For your firm: Prices your firm will receive (for its own goods and services sold). 2.0 Compensation your firm will pay per employee (for wages and benefits). 3.0 2. For your employees: Prices your employees will pay (for goods and services where they live). 2.0 3. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.0 For the next 10 years (2016 through 2025), what is your expected annual average percent change with respect to the following: Percent Change* 4. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.5 *Numbers represent median forecasts. At least 85 percent of the firms responding to the survey also responded to the special questions. Summary of Returns May 2016 May vs. April Six Months from Now vs. May Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -1.6 24.5 49.2 26.3 -1.8 42.2 47.1 36.2 11.0 36.1 Conditions New Orders 0.0 23.9 50.3 25.8 -1.9 48.7 52.7 31.6 12.8 39.9 Shipments -10.8 26.7 46.1 27.2 -0.5 41.0 50.2 31.3 12.2 37.9 Unfilled Orders -6.3 9.3 70.4 18.0 -8.8 15.8 24.2 63.6 9.7 14.5 Delivery Times -9.9 3.9 76.9 18.6 -14.6 0.5 7.3 78.9 9.5 -2.2 Inventories -20.5 18.9 59.6 21.4 -2.5 -3.9 20.9 44.0 33.0 -12.0 Prices Paid 13.2 23.6 68.3 8.0 15.7 36.7 32.8 56.6 8.1 24.8 Prices Received 7.4 20.4 73.6 5.6 14.8 22.6 20.7 66.0 10.1 10.5 Number of Emp. -18.5 13.8 69.1 17.1 -3.3 14.2 22.8 63.1 10.8 12.0 Avg. Emp. Wrkwk. -16.2 6.1 68.6 21.3 -15.1 12.5 21.0 65.6 7.3 13.7 Capital Ex. -- -- -- -- -- 12.7 30.1 58.9 6.5 23.6 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omissions by respondents, or both. (4) Survey data reflect information received through May 16, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: May 19, 2016, at 8:30 a.m. ET. April 2016 Firms responding to the Manufacturing Business Outlook Survey reported no improvement in business conditions this month. The indicator for general activity, which rose sharply in March, fell to a slightly negative reading in April. Other broad indicators suggested a similar relapse in growth that was reported last month. The indicators for both employment and work hours also fell notably. Despite weakness in current conditions, the survey’s indicators of future activity showed continued improvement, suggesting that the fallback is considered temporary. Current Indicators Fall from Last Month’s Readings The diffusion index for current activity decreased from 12.4 in March to -1.6 this month. The index had turned positive last month following six consecutive negative readings. The current new orders and shipments indexes also fell this month. The percentage of firms (23 percent) reporting a rise in new orders was exactly offset by the percentage reporting a decline. The current new orders index decreased from 15.7 to zero this month, while the current shipments index fell precipitously, from 22.1 to -10.8. The unfilled orders and delivery time indexes suggested weakness, as both indexes were in negative territory this month. Firms continued to report overall declines in inventories. The survey’s indicators of employment corroborate weakness in the other broad indicators this month. The employment index decreased 17 points and registered its fourth consecutive negative reading. Nearly 62 percent of the firms reported no change in employment this month, but the percentage reporting decreases rose from 17 percent in March to 27 percent this month. Firms reported a notable decline in average work hours: The index decreased 22 points and returned to negative territory after last month’s first positive reading in three months. Output Prices Rise Slightly Manufactured goods prices, on balance, rose slightly this month. The prices received index increased 4 points, to 7.4, its second consecutive positive reading. But the largest share of firms (75 percent) reported no change in prices this month. Input price increases were reported by 15 percent of the firms this month. The prices paid index, which had remained negative for seven consecutive months, increased 14 points, to 13.2. Outlook Improves Again this Month, Despite Current Weakness The survey’s future indicators bucked the trend of weakening current indicators this month. The diffusion index for future general activity increased from a reading of 28.8 in March to 42.2 this month. This is the highest reading for the index in 15 months. The largest share of firms (51 percent) expect an increase in activity over the next six months, while only 9 percent expect declines. The future indexes for new orders and shipments also moved higher this month, increasing 10 points and 7 points, respectively. The future employment index also increased, from 6.3 to 14.2. More than 25 percent of the surveyed firms expect to increase employment levels over the next six months. This is slightly higher than the 22 percent that increased employment last month. The indexes for future prices paid and received edged higher this month, increasing 12 points and 8 points, respectively. Spending on Security and Regulatory Compliance Is on the Rise In this month’s special questions, firms were asked about recent trends in spending related to security and regulatory compliance. Sixty percent of the responding firms reported higher spending for cybersecurity/network security, while 31 percent reported higher spending for physical security. The largest percentage of firms (74 percent) reported increased spending for general regulatory compliance, and 26 percent characterized those increases as substantial. As a share of total capital spending, spending devoted to data security (5 percent) exceeded spending for physical security (3 percent), and their combined total exceeded the average share for regulatory compliance (6 percent). Summary This month’s Manufacturing Business Outlook Survey suggests a relapse in growth of the region’s manufacturing sector. The survey’s indicators for general activity, new orders, shipments, and employment all fell notably from their readings in March. Despite reported weakness this month, firms’ forecasts for the next six months showed continued improvement, suggesting that the reported decline in growth is expected to be temporary. Special Questions (April 2016) 1. How has your company's total spending for the following categories changed over the past few years? Data and Network Security Percent* ---------------- Decreased Substantially 1.5 Decreased Modestly 3.1 Decreased Subtotal 4.6 Not Changed 35.4 Increased Modestly 47.7 Increased Substantially 12.3 Increased Subtotal 60.0 Physical Security (Plant, Employees, Transportation) Percent* ---------------- Decreased Substantially 0.0 Decreased Modestly 3.1 Decreased Subtotal 3.1 Not Changed 65.6 Increased Modestly 25.0 Increased Substantially 6.3 Increased Subtotal 31.3 General State and Federal Regulatory Compliance (EPA, OSHA, FDA, etc.) Percent* ---------------- Decreased Substantially 0.0 Decreased Modestly 0.0 Decreased Subtotal 0.0 Not Changed 26.2 Increased Modestly 47.7 Increased Substantially 26.2 Increased Subtotal 73.9 2. Approximately what percentage of current capital spending does your company devote to the same categories? Average Share (Percent) Data and Network Security 4.7 Physical Security (Plant, Employees, Transportation) 2.8 General State and Federal Regulatory Compliance (EPA, OSHA, FDA, etc.) 5.8 Total 13.3 *Totals may not sum to 100 percent due to rounding. Summary of Returns April 2016 April vs. March Six Months from Now vs. April Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 12.4 24.5 47.5 26.2 -1.6 28.8 50.8 32.9 8.6 42.2 Conditions New Orders 15.7 22.9 51.9 22.9 0.0 38.8 55.7 33.7 6.9 48.7 Shipments 22.1 17.5 52.6 28.4 -10.8 34.2 48.8 35.6 7.8 41.0 Unfilled Orders -1.9 10.7 70.7 17.0 -6.3 12.4 25.6 58.7 9.8 15.8 Delivery Times 0.3 4.2 80.0 14.1 -9.9 -3.7 12.1 71.1 11.6 0.5 Inventories -12.7 13.1 53.3 33.6 -20.5 -14.0 18.2 56.2 22.1 -3.9 Prices Paid -0.9 15.4 80.4 2.2 13.2 24.7 36.7 56.9 0.0 36.7 Prices Received 3.5 15.2 75.4 7.8 7.4 15.1 31.2 52.9 8.6 22.6 Number of Emp. -1.1 8.0 61.8 26.5 -18.5 6.3 25.1 54.2 10.9 14.2 Avg. Emp. Wrkwk. 5.7 5.9 70.7 22.0 -16.2 9.2 21.1 62.8 8.6 12.5 Capital Ex. -- -- -- -- -- 13.3 27.2 46.3 14.6 12.7 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey data reflect information received through April 18, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: April 21, 2016, at 8:30 a.m. ET. March 2016 Firms responding to the Manufacturing Business Outlook Survey reported an improvement in business conditions this month. The indicator for general activity rose sharply in March to its first positive reading in seven months. Other broad indicators offered similar signals of growth: The indexes for shipments and new orders also rose notably. Firms continued to report overall weak employment. With respect to the manufacturers’ forecasts, the survey’s future indicators also showed significant improvement this month. Current Indicators Reflect a Pickup in Activity The diffusion index for current activity increased from a reading of -2.8 in February to 12.4 this month, its first positive reading in seven months. Both the current new orders and shipments indexes also showed improvement this month. The current new orders index returned to positive territory, increasing 21 points to 15.7. Nearly 37 percent of the firms reported an increase in new orders this month. The current shipments index rose 20 points, to 22.1. The unfilled orders and delivery time indexes showed notable improvement, increasing 11 points and 16 points, respectively. While the unfilled orders remained slightly negative, the delivery time index reached its first positive reading in 11 months. Firms continued to report overall declines in inventories. The survey’s indicators of employment improved but suggest continued weakness. The employment index increased 4 points but remained slightly negative at -1.1. About 67 percent of the firms reported no change in employment this month, and the percentage reporting decreases (17 percent) was slightly larger than the percentage reporting increases (16 percent). Firms reported a slight rise in average work hours: The workweek index increased 19 points and was at its first positive reading in three months. Output Prices Rise Slightly Prices received for manufactured goods, on balance, rose slightly this month. The prices received index increased 8 points, to 3.5, its first positive reading in nine months. But the largest share of firms (81 percent) reported no change in prices this month. Input price pressures remain subdued. The prices paid index, at -0.9, has remained negative for seven consecutive months. Outlook Improved This Month The diffusion index for future general activity increased from a reading of 17.3 in February to 28.8 this month. This is the highest reading for the index in four months. The largest share of firms (41 percent) expects an increase in activity over the next six months, while 13 percent expect declines. The future indexes for new orders and shipments also moved higher this month, increasing 19 points and 14 points, respectively. The future employment index increased more modestly, from 2.3 to 6.3. More than 22 percent of the surveyed firms expect to increase employment levels over the next six months. The indexes for future prices paid and received showed significant improvement this month, both increasing 13 points. In this month’s special questions, firms were surveyed about their capital spending plans for 2016 compared with actual spending levels in 2015. More than 46 percent of the firms indicated that total capital spending would increase this year compared with 2015, while 31 percent indicated that spending would decrease. Expected high sales growth and the need to replace capital goods were the most cited reasons for the increase. Among the firms that do not plan to increase capital spending, the most cited reasons were low sales growth and low capacity utilization. Summary The Manufacturing Business Outlook Survey suggests a pickup in general activity in March. The survey’s indicators for general activity, new orders, and shipments all improved notably from their readings in February. Firms reported that overall employment was steady. Indicators reflecting firms’ expectations for the next six months improved this month. Special Questions (March 2016) 1. In 2016, do you expect the following capital expenditure categories to be lower than, the same, or higher than last year? Lower Same Higher Diffusion (%) (%) (%) Index Noncomputer equipment 23.4 40.6 35.9 12.5 Software 23.0 52.5 24.6 1.6 Computers and related hardware 20.6 61.9 17.5 -3.2 Structures 32.3 40.3 27.4 -4.8 Energy-saving investments 21.3 62.3 16.4 -4.9 Total Capital Spending 30.8 23.1 46.2 15.4 2. If your firm plans to increase total capital spending, what are the major factors behind your decision?* Percent Expected growth of sales is high 40.0 Need to replace other capital goods 36.7 Capacity utilization is currently high 23.3 Need to replace information technology equipment 23.3 Firm's cash flow or balance-sheet position has improved 20.0 Need to replace equipment that consumes too much energy 13.3 Cost or availability of external finance has improved 6.7 3. If your firm does not plan to increase total capital spending, what are the major factors behind your decision?* Percent Expected growth of sales is low 57.9 Capacity utilization is currently low 31.6 Limited need to replace information technology equipment 21.1 Cost or availability of external finance has deteriorated 15.8 Firm's cash flow or balance-sheet position has deteriorated 10.5 Limited need to replace other capital goods 5.3 * The sum of percentages may be greater than 100 due to firms indicating more than one factor if applicable. March 2016 March vs. February Six Months from Now vs. March Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -2.8 27.4 51.9 15.0 12.4 17.3 41.4 29.8 12.6 28.8 Conditions New Orders -5.3 36.7 37.8 21.0 15.7 19.8 49.7 28.7 10.9 38.8 Shipments 2.5 37.5 47.2 15.3 22.1 20.2 47.1 27.4 13.0 34.2 Unfilled Orders -12.7 13.6 68.9 15.5 -1.9 -2.6 22.2 57.6 9.8 12.4 Delivery Times -16.1 11.0 78.3 10.7 0.3 -10.3 6.0 75.6 9.7 -3.7 Inventories -17.1 17.2 51.2 29.9 -12.7 -8.9 13.0 49.8 27.0 -14.0 Prices Paid -2.2 13.7 71.7 14.6 -0.9 11.9 27.9 57.8 3.2 24.7 Prices Received -4.5 11.3 80.9 7.8 3.5 2.1 21.6 63.3 6.5 15.1 Number of Emp. -5.0 15.5 66.5 16.6 -1.1 2.3 22.2 52.1 15.9 6.3 Avg. Emp. Wrkwk. -12.9 14.7 75.4 9.0 5.7 -12.5 16.4 64.6 7.2 9.2 Capital Ex. -- -- -- -- -- 2.5 25.3 54.5 12.0 13.3 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey data reflect information received through March 14, 2016. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: March 17, 2016, at 8:30 a.m. ET. February 2016 Firms responding to the Manufacturing Business Outlook Survey reported continued weakness in business conditions this month. The indicator for general activity remained slightly negative this month, edging up only marginally from its reading in January. Other indicators offered mixed signals: The shipments index remained positive, but new orders and employment indexes remained negative and declined modestly. The survey’s price indexes suggest that both input prices and selling prices fell this month. With respect to the manufacturers’ forecasts, the survey’s future indicators remained overall positive but showed continued weakening. Current Indicators Suggest Continued Weak Activity The diffusion index for current activity increased from a reading of -3.5 in January to -2.8 in February and has now been negative for six consecutive months. The index for current new orders remained negative and edged down 4 points, to -5.3. Firms reported an increase in shipments; the shipments index remained positive for the second consecutive month but fell 7 points from January. Firms reported continued declines in inventories, and the inventories index remained negative. Firms’ backlogs of unfilled orders were in decline again this month, and delivery times were shorter, according to the responding firms. The survey’s labor market indicators suggest continued weak employment conditions. The employment index decreased 3 points, from -1.9 to -5.0. About 63 percent of the firms reported no change in employment this month, and the percentage reporting decreases (20 percent) was slightly larger than the percentage reporting increases (15 percent). Firms Still Report Downward Price Pressures The indexes for both prices paid and prices received were negative. Most firms (66 percent) reported no changes in the prices for their own manufactured products this month. The percentage of firms reporting lower prices (18 percent) was slightly greater than the percentage reporting higher prices (14 percent). The current prices received index decreased from -2.8 to -4.5 and has recorded eight consecutive negative readings. Firms reported, on balance, declines in the prices paid for inputs. The percentage of firms reporting lower input prices (21 percent) was greater than the percentage of firms reporting higher input prices (19 percent). The prices paid index decreased 1 point and remained negative for the sixth consecutive month. Forecasts Overall Positive, but Confidence Wanes The diffusion index for future general activity fell from a reading of 19.1 in January to 17.3 this month. The index has trended down since last summer and is now at its lowest reading since November 2012. The largest share of firms expects an increase in activity over the next six months (42 percent), but 25 percent expect declines. The future indexes for new orders and shipments also edged down slightly this month. Firms’ forecasts for future employment have been moderating the past few months. The future employment index fell from 5.5 to 2.3 this month, the third consecutive decline. The future workweek index also declined into negative territory for the first time in six months. Firms Expect Their Own Price Increases to Remain Below the Rate of Inflation In this month’s special questions, firms were asked to forecast the changes in prices of their own products over the next four quarters. The median forecast was for an increase in their own prices of 1.3 percent, a rate of increase lower than the rate of inflation expected to be faced by the workers they employ regionally (2 percent) and lower than the rate of inflation expected for the average U.S. consumer (2 percent). Firms expect their own per employee compensation costs (wages plus benefits) to rise by 3 percent over the next four quarters. When asked about the average rate of inflation for consumers over the next 10 years, the firms’ median forecast was 2.5 percent. With one exception, all the responses were identical to the results from November when the questions were last asked. In November, the median price forecast for firms’ own prices was slightly lower, at 1 percent. Summary Weakness in the region’s manufacturing sector continued this month, according to firms responding to the February survey. Indexes suggest continued modest declines in activity and new orders but a continued rise in shipments. Employment indicators suggest slight decreases in overall manufacturing employment this month. Indicators for future conditions remained positive overall but continued to trend downward. Special Questions (February 2016) For the period 2016:Q1 to 2017:Q1, please list your expected annual percent change with respect to the following: Percent Change* 1. For your firm: Prices your firm will receive (for its own goods and services sold). 1.3 Compensation your firm will pay per employee (for wages and benefits). 3.0 2. For your employees: Prices your employees will pay (for goods and services where they live). 2.0 3. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.0 For the next 10 years (2016 through 2025), what is your expected annual average percent change with respect to the following: Percent Change* 4. For U.S. consumers: Prices U.S. consumers will pay (for goods and services). 2.5 *Numbers represent median forecasts. At least 81 percent of the firms responding to the survey also responded to the special questions. Summary of Returns February 2016 February vs. January Six Months from Now vs. February Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -3.5 26.9 43.0 29.7 -2.8 19.1 42.0 25.4 24.7 17.3 Conditions New Orders -1.4 28.3 36.1 33.6 -5.3 21.1 42.2 28.0 22.4 19.8 Shipments 9.6 29.1 40.2 26.5 2.5 22.0 43.8 25.9 23.6 20.2 Unfilled Orders -8.8 8.7 69.7 21.4 -12.7 0.5 14.5 61.8 17.1 -2.6 Delivery Times -7.6 4.8 72.5 20.9 -16.1 -6.5 5.9 71.4 16.1 -10.3 Inventories -15.7 15.5 50.9 32.7 -17.1 1.5 17.8 49.1 26.6 -8.9 Prices Paid -1.1 18.6 60.6 20.8 -2.2 18.8 23.5 57.2 11.7 11.9 Prices Received -2.8 13.5 66.1 18.1 -4.5 10.1 18.1 59.6 15.9 2.1 Number of Emp. -1.9 14.6 63.1 19.7 -5.0 5.5 25.9 43.5 23.5 2.3 Avg. Emp. Wrkwk. -2.2 13.2 60.7 26.1 -12.9 2.1 7.4 64.3 19.9 -12.5 Capital Ex. -- -- -- -- -- 9.4 20.3 52.2 17.9 2.5 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey data reflect information received through February 15, 2016. January 2016 Manufacturing conditions in the region contracted modestly this month, according to firms responding to the January Manufacturing Business Outlook Survey. The indicator for general activity remained negative this month; however, it rebounded from a lower reading in December. Other indicators offered mixed signals: Shipments increased this month, but new orders and employment declined modestly. The survey’s price indexes suggest continued downward pressure on manufacturing prices. With respect to the manufacturers’ forecasts, nearly all the survey’s future indicators showed continued weakening this month while remaining positive. Most Current Indicators Suggest Weak Activity The diffusion index for current activity increased from a revised reading of -10.2 in December to -3.5 and has now been negative for five consecutive months.* The index for current new orders remained negative but increased 10 points, to -1.4. Firms reported an increase in shipments to begin the new year: The shipments index increased 12 points, its first positive reading in four months. Firms reported continued declines in inventories: The inventories index remained negative and decreased 10 points. Firms’ backlog of unfilled orders also declined this month, and delivery times were shorter, according to the responding firms. The survey’s labor market indicators suggest weaker employment. The employment index decreased 4 points, from 2.2 to -1.9. Nearly 69 percent of the firms reported no change in employment this month, and the percentage reporting decreases (16 percent) was slightly larger than the percentage reporting increases (14 percent). Firms Still Report Downward Price Pressures Most firms (76 percent) reported no changes in the prices for their own manufactured products this month. The percentage of firms reporting lower prices (13 percent) was slightly greater than the percentage reporting higher prices (10 percent). Although the current prices received index increased from -8.5 to -2.8, the index has recorded seven consecutive negative readings. Firms reported, on balance, declines in the prices paid for inputs. The percentage of firms reporting lower input prices (18 percent) was greater than the percentage of firms reporting higher input prices (17 percent). The prices paid index increased 7 points but remained negative for the fifth consecutive month. Future Indexes Continue to Slide The diffusion index for future general activity fell from a revised reading of 24.1 to 19.1 this month. The index has trended down since last summer and is now at its lowest reading since November 2012. The largest share of firms expects an increase in activity over the next six months (43 percent), but 24 percent expect declines. The future indexes for new orders and shipments also deteriorated this month, decreasing 13 points and 15 points, respectively. Firms’ forecasts for future employment have been modest during the past few months. The future employment index fell from 7.0 in December to 5.5 this month, the lowest reading since November 2012. Energy Price Reductions Are Positive Overall In this month’s special questions, firms were asked about the effects of lower energy prices on manufacturing business. The responses indicate that the net effects have been positive but that a large share of firms reported negative impacts from decreased demand from energy-producing customers. Nearly 51 percent of the firms reported overall positive effects from lower energy prices, while 30 percent reported negative effects. The largest percentage (33 percent) characterized the effect as slightly positive. Over 41 percent of the firms cited that falling energy prices had lowered the costs of production, but nearly the same percentage of firms (42 percent) said the lower prices had decreased demand from energy production–related customers. For 22 percent of the firms, energy cost reductions were increasing sales margins, but on the negative side, 22 percent indicated that the lower energy costs had reduced revenues. With regard to their own expectations for energy prices over the next six months, firms were evenly divided about whether their forecasts for energy prices would increase (32 percent) or decrease (30 percent) demand. About the same percent (30 percent) said demand would not be affected. Summary Weakness in regional manufacturing conditions continued this month, according to firms responding to the January survey. While indexes for current general activity and new orders remained negative, the indexes increased from lower readings at the end of last year. Firms reported an increase in shipments this month but a modest decrease in employment. Indicators for future conditions remained positive overall but suggested a continuing deterioration in confidence about manufacturing growth for the first half of 2016. * The survey’s annual historical revisions, which incorporate new seasonal adjustment factors, were released on January 14, 2016. The full set of revised historical data is available at https://www.philadelphiafed.org/mbos-histrev2016. Special Questions (January 2016) 1. Overall, what impacts have falling energy prices had on your business? Percent of Respondents Subtotals Strongly positive 2.9% Positive Modestly positive 14.5% 50.7% Slightly positive 33.3% None 15.9% Slightly negative 11.6% Negative Modestly negative 4.3% 30.4% Strongly negative 14.5% Unsure 2.9% 2. Impacts of changing energy prices manifest themselves in multiple ways. Falling energy prices have:* Decreased demand from our energy production–related customers 42.0% Increased demand from our nonenergy production–related customers 4.3% Lowered our firm’s cost of production 40.6% Lowered our firm’s revenues 21.7% Increased our sales margins 21.7% Decreased our sales margins 10.1% Had no effect 23.2% Other 1.4% 3. Based on your assumptions about energy prices for the next six months, you expect overall demand for your products to: Decrease significantly 4.3% Decrease Decrease modestly 15.9% 30.3% Decrease slightly 10.1% Be unaffected 30.4% Increase slightly 20.3% Increase Increase modestly 11.6% 31.9% Increase significantly 0.0% Unsure 5.8% * Percentages do not add up to 100 percent because individual firms selected multiple responses. Summary of Returns January 2016 January vs. December Six Months from Now vs. January Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -10.2 26.7 37.5 30.2 -3.5 24.1 43.4 27.8 24.3 19.1 Conditions New Orders -11.1 29.3 39.3 30.7 -1.4 34.5 40.9 36.0 19.8 21.1 Shipments -2.1 35.6 37.0 25.9 9.6 36.6 42.9 32.5 20.9 22.0 Unfilled Orders -17.6 15.9 58.5 24.7 -8.8 7.4 16.5 62.9 16.0 0.5 Delivery Times -6.1 7.8 76.5 15.4 -7.6 -2.3 5.7 76.8 12.2 -6.5 Inventories -5.7 17.9 45.3 33.6 -15.7 -1.7 23.4 49.8 21.9 1.5 Prices Paid -8.3 16.6 64.5 17.7 -1.1 26.0 27.5 59.3 8.7 18.8 Prices Received -8.5 10.3 76.0 13.1 -2.8 15.0 20.4 63.0 10.3 10.1 Number of Emp. 2.2 13.7 68.6 15.7 -1.9 7.0 19.9 61.7 14.3 5.5 Avg. Emp. Wrkwk. 0.6 19.4 58.7 21.6 -2.2 0.2 17.7 62.3 15.6 2.1 Capital Ex. -- -- -- -- -- 10.7 24.4 51.7 15.1 9.4 Notes: (1) Items may not add to 100 percent because of omission by respondents. (2) All data are seasonally adjusted. (3) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (4) Survey data reflect information received through January 18, 2016.