December 2020 Note: Survey responses were collected from December 7 to December 14. Manufacturing activity in the region continued to grow, but growth was less widespread, according to firms responding to the December Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the seventh consecutive month but fell notably from their readings in November. Some future indexes also moderated this month but continue to indicate that firms expect growth over the next six months. Current Indicators Are Positive but Weaker The diffusion index for current activity fell 15 points to 11.1 in December, its lowest positive reading following its fall to long-term lows in April and May. The percentage of firms reporting increases this month (29 percent) exceeded the percentage reporting decreases (18 percent). The index for new orders decreased nearly 36 points to a reading of 2.3. Although nearly 31 percent of the firms reported increases in new orders this month, the share of firms reporting decreases jumped from 11 percent in November to 28 percent this month. The current shipments index fell 11 points to 14.4 in December. On balance, fewer firms reported increases in manufacturing employment this month. The current employment index has remained positive for six consecutive months but decreased 19 points to 8.5 in December. Employment increases were reported by 18 percent of the firms, down from 34 percent in November. The average workweek index was positive for the sixth consecutive month but edged down nearly 8 points to 18.0. Survey Price Indicators Moderate This Month Price increases were less widespread this month. The prices paid diffusion index decreased 12 points to 27.1. Over 29 percent of the firms reported increases in input prices, compared with 39 percent last month; most firms (63 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, decreased 7 points to 18.0. Over 20 percent of the firms reported increases in prices of their own manufactured goods, while 2 percent reported declines. The largest percentage of firms (75 percent) reported no change in prices for their manufactured goods. Firms Expect Highest Cost Increases for Health Benefits In this month’s special questions, the firms were asked about their expectations for changes in various input and labor costs for the coming year. The average expected increase for wages was 2.5 percent, for health benefits costs was 5.3 percent, and for nonhealth benefits costs was 2.4 percent. The average forecasted growth in total wage compensation costs (wages plus benefits) was 3.9 percent. The costs of raw materials and intermediate goods are expected to increase 3.6 percent and 2.4 percent, respectively. Energy costs were forecast to increase 1.2 percent. The firms were also asked how the expected costs for 2021 will compare with this year’s costs. On balance, for all categories of expenses, the forecasts indicated increases relative to 2020. Firms Continue to Expect Growth The survey’s future indicators for activity and new orders were slightly weaker this month, but future indicators for shipments and employment improved. The diffusion index for general activity over the next six months decreased 5 points to 39.2 in December. The percentage of firms expecting growth over the next six months (53 percent) remained significantly greater than the percentage expecting declines (14 percent). The future new orders index fell 7 points but remains at an elevated reading of 41.5. The future shipments index increased 2 points to 45.3 this month. The future employment index also showed improvement, edging 5 points higher. Over 45 percent of the firms expect to increase employment in their manufacturing plants over the next six months. The future capital spending index declined 2 points to 23.8. Summary Responses to the Manufacturing Business Outlook Survey suggested a slower expansion for the region’s manufacturing sector in December. Indicators for general activity, new orders, shipments, and employment remained positive but were weaker in December. Changes in future indexes were mixed this month but suggest that overall growth is expected to continue over the next six months. Special Questions (December 2020) 1. What percentage change in costs do you expect for the following categories in 2021?* Energy Other Inter- Wages Health Non- Wages + (%) Raw mediate (%) Benefits health Health Materials goods (%) Benefits Benefits + (%) (%) (%) Nonhealth Benefits (%) Decline of more than 4% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Decline of 3-4% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Decline of 2-3% 1.8 3.6 0.0 0.0 0.0 0.0 0.0 Decline of 1-2% 3.6 1.8 0.0 0.0 0.0 0.0 0.0 No change 36.4 7.1 18.2 8.9 19.6 26.8 3.6 Increase of 1-2% 32.7 21.4 27.3 16.1 3.6 19.6 7.3 Increase of 2-3% 14.5 23.2 23.6 46.4 12.5 32.1 34.5 Increase of 3-4% 5.5 14.3 14.5 21.4 21.4 7.1 25.5 Increase of 4-5% 3.6 8.9 9.1 5.4 5.4 10.7 14.5 Increase of 5-7.5% 1.8 7.1 5.5 1.8 12.5 0.0 5.5 Increase of more than 7.5% 0.0 12.5 1.8 0.0 25.1 3.6 9.1 ------------------- ------------------------------------------------------------ Average Exp.Change 1.2 3.6 2.4 2.5 5.3 2.4 3.9 2. How do these expected cost changes compare with those in 2020? Higher 37.0 50.0 46.3 50.0 53.6 33.9 60.7 Same 53.7 37.5 50.0 41.1 35.7 60.7 32.1 Lower 9.3 12.5 3.7 8.9 10.7 5.4 7.1 ------------------------------------------------------------------------------- Diffusion Index (Higher Minus Lower) 27.7 37.5 42.6 41.6 42.9 28.5 53.6 *The firms responded to more detailed changes than shown in the provided ranges. Summary of Returns December 2020 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 26.3 29.0 50.8 17.9 11.1 44.3 52.7 23.7 13.5 39.2 Conditions New Orders 37.9 30.7 38.6 28.4 2.3 48.1 56.0 23.4 14.4 41.5 Shipments 24.9 35.5 42.2 21.1 14.4 43.1 55.4 30.5 10.1 45.3 Unfilled Orders 22.2 19.4 60.6 18.0 1.4 13.2 22.6 63.7 9.3 13.3 Delivery Times 18.0 25.1 67.2 6.6 18.5 4.7 17.5 66.2 9.9 7.7 Inventories 1.8 26.4 56.6 16.1 10.3 20.3 24.6 52.8 17.2 7.4 Prices Paid 38.9 29.1 63.4 2.1 27.1 49.4 54.4 33.3 7.8 46.6 Prices Received 25.4 20.1 75.2 2.1 18.0 37.2 41.3 46.1 5.8 35.5 Number of Emp. 27.2 18.3 71.8 9.9 8.5 36.2 44.7 49.5 3.7 41.0 Avg. Emp. Wrkwk. 25.7 22.9 72.0 4.9 18.0 20.9 28.1 58.0 11.1 17.0 Capital Ex. -- -- -- -- -- 25.5 32.5 56.0 8.7 23.8 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 14, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: December 17, 2020, at 8:30 a.m. ET. November 2020 Note: Survey responses were collected from November 9 to November 16. Manufacturing activity in the region continued to grow, according to firms responding to the November Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the sixth consecutive month but fell from their readings in October. However, employment increases were more widespread this month. Most future indexes also moderated this month but continue to indicate that firms expect growth over the next six months. Current Indicators Reflect Continued Recovery The diffusion index for current activity decreased 6 points to 26.3 in November, its sixth consecutive positive reading after reaching long-term lows in April and May. The percentage of firms reporting increases this month (42 percent) exceeded the percentage reporting decreases (15 percent). The index for new orders decreased 5 points to a reading of 37.9. Nearly 49 percent of the firms reported increases in new orders this month, compared with 55 percent last month. The current shipments index fell 22 points to 24.9 in November. Nearly 41 percent of the firms reported higher shipments, compared with 57 percent last month. On balance, the firms reported increases in manufacturing employment for the fifth consecutive month. The current employment index increased 15 points to 27.2. Employment increases were reported by 34 percent of the firms (up from 23 percent last month), while 7 percent reported decreases. The average workweek index was positive for the fifth consecutive month and was essentially unchanged at 25.7. Survey Price Indicators Move Higher Price increases were more widespread this month. The prices paid diffusion index increased 10 points to 38.9. Nearly 39 percent of the firms reported increases in input prices, compared with 29 percent last month; most firms (59 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, increased 11 points to 25.4. Over 26 percent of the firms reported increases in prices of their own manufactured goods, compared with 14 percent in October. Firms Expect Own Prices to Match Rate of Inflation In this month’s special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms’ median forecast was for an increase of 2.0 percent, the same as reported when the question was asked in August. The firms’ actual price change over the past year was 1.0 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters, the same as in August. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was unchanged at 2.0 percent. The firms’ median forecast for the long-run (10-year average) inflation rate was 2.5 percent, a slight decrease from 2.8 percent in the previous quarter. Firms’ Outlook Softens but Continued Growth Is Expected The respondents recorded weaker expectations for growth compared with October. The diffusion index for future general activity decreased 18 points to 44.3 in November. The percentage of firms expecting growth over the next six months (60 percent) remained significantly greater than the percentage expecting declines (16 percent). The future new orders index fell 4 points but remains at an elevated reading of 48.1, and the future shipments index decreased 9 points to 43.1 this month. The future employment index decreased 10 points to 36.2. Over 41 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with 52 percent in October. The future capital spending index declined 11 points to 25.5. Summary Responses to the November Manufacturing Business Outlook Survey suggest continued recovery for the region’s manufacturing sector. Although the indicators for current activity, new orders, and shipments all moderated from last month, the current employment index showed notable improvement. The survey’s future indexes also moderated this month but suggest that growth is expected to continue over the next six months. Special Questions (November 2020) Please list the annual percent change with respect to the following: Current Previous (August 2020) For your firm: Forecast for next year (2020Q4-2021Q4) 1. Prices your firm will receive (for its own goods and services sold). 2.0 2.0 2. Compensation your firm will pay per employee (for wages and benefits). 3.0 3.0 Last year's price change (2019Q4-2020Q4) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 1.0 1.5 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 2.0 2.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2020-2029). 2.5 2.8 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns November 2020 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 32.3 41.6 43.1 15.3 26.3 62.7 60.0 16.0 15.7 44.3 Conditions New Orders 42.6 48.8 40.2 10.9 37.9 51.6 60.6 20.3 12.5 48.1 Shipments 46.5 40.8 43.3 15.9 24.9 51.7 57.8 23.4 14.7 43.1 Unfilled Orders 8.3 33.4 55.2 11.3 22.2 16.2 26.8 52.6 13.6 13.2 Delivery Times 20.5 21.2 74.9 3.2 18.0 1.9 13.5 71.7 8.7 4.7 Inventories -2.5 21.8 52.3 20.0 1.8 16.2 30.2 50.5 9.9 20.3 Prices Paid 28.5 38.9 59.1 0.0 38.9 42.3 51.1 40.6 1.8 49.4 Prices Received 14.0 25.5 72.9 0.1 25.4 41.0 40.6 50.9 3.4 37.2 Number of Emp. 12.7 34.0 56.7 6.8 27.2 45.7 41.3 47.5 5.1 36.2 Avg. Emp. Wrkwk. 25.3 32.5 59.4 6.8 25.7 19.8 33.5 49.1 12.7 20.9 Capital Ex. -- -- -- -- -- 36.5 40.0 45.5 14.5 25.5 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 16, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: November 19, 2020, at 8:30 a.m. ET. October 2020 Note: Survey responses were collected from October 5 to October 13. Manufacturing activity in the region picked up this month, according to firms responding to the October Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments all showed notable improvement. Most future indexes increased and continue to reflect optimism among firms about growth over the next six months. Most Current Indicators Show Improvement The diffusion index for current activity increased 17 points to 32.3 in October, its fifth consecutive positive reading after reaching long-term lows in April and May. The percentage of firms reporting increases this month (47 percent) exceeded the percentage reporting decreases (15 percent). The index for new orders rose 17 points to a reading of 42.6. Nearly 55 percent of the firms reported increases in new orders this month, compared with 42 percent last month. The current shipments index also increased 10 points to 46.5 in October. On balance, the firms reported increases in manufacturing employment for the fourth consecutive month. The current employment index, however, fell 3 points to 12.7 this month. Employment increases were reported by 23 percent of the firms, while 10 percent reported decreases. The average workweek index was positive for the fourth consecutive month and increased 18 points to 25.3. Most Firms Report Steady Prices The survey’s price indicators suggest modest price pressure. The prices paid diffusion index increased 3 points to 28.5. Nearly 29 percent of the firms reported increases in input prices, and none reported decreases; most firms (72 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, decreased 4 points to 14.0. Just 14 percent of the firms reported increases in prices of their own manufactured goods, while 86 percent reported no change in prices. Total Capital Spending Influenced by Policy Uncertainty and COVID-19 Effects For this month's special questions, manufacturers were asked about current capacity utilization rates compared with the same time last year. The median capacity utilization rate reported among the firms was 72.5 percent, down from 82.5 percent estimated one year earlier. Firms were asked to forecast total capital spending for 2021 compared with levels in 2020, and more firms indicated that they would increase spending (37 percent) than decrease spending (12 percent). The firms were also asked about their plans for different categories of capital spending next year. For all five categories of investment spending (software, noncomputer equipment, computer equipment, structure, and energy-saving investments), the share of firms expecting to increase spending was higher than the share of firms expecting to decrease spending. On balance, the firms expect larger increases for software and noncomputer equipment. The firms were also asked about the impact of economic policy uncertainty and the effects of COVID-19 on their total capital spending plans for next year. The firms indicated net negative effects from both, with more firms indicating decreases due to the pandemic (48 percent) compared with policy uncertainty (23 percent). Firms Remain Optimistic About Future Growth The respondents remained optimistic about growth over the next six months. The diffusion index for future general activity increased 6 points to 62.7 in October, its highest reading since June. The future new orders index fell 5 points but remains at an elevated reading of 51.6, and the future shipments index edged up 4 points to 51.7 this month. The firms continued to expect increases in employment over the next six months, with the future employment index increasing 3 points. Over 52 percent of the firms expected higher employment over the next six months. The index for future capital spending increased 6 points to 36.5. Summary Responses to the October Manufacturing Business Outlook Survey suggest a pickup in activity for the region’s manufacturing sector. The indicators for current activity, new orders, and shipments all increased this month. Special questions about firms’ current capacity utilization reflect the sizable impact of COVID-19, inasmuch as firms, on balance, report operating at notably lower levels of capacity than one year ago. The survey’s future indexes suggest continued widespread optimism about manufacturing activity over the next six months. Special Questions (October 2020) 1. Which of the following best characterizes your plant’s current capacity utilization rate (current and last year)? Capacity Utilization Rate Current Same Time Last Year (% of reporters) (% of reporters) Less than 60% 14.3 0.0 60%–70% 19.0 11.9 70%–80% 31.0 14.4 80%–90% 28.6 54.8 Greater than 90% 7.2 19.0 Median utilization rate* 72.5 82.5 2. Do you expect the following capital expenditure categories over the next year (2021) to be higher than, the same, or lower than in the current year? Higher Same Lower Diffusion --------(% of reporters)------- Index Software 38.1 59.5 2.4 35.7 Noncomputer equipment 41.9 42.9 16.3 25.6 Computer and related hardware 23.8 69.0 7.1 16.7 Structure 21.4 57.1 13.2 8.2 Energy-saving investments 13.2 69.0 10.5 2.7 Total capital spending 36.6 51.2 12.2 24.4 3. How have each of the two factors, economic policy uncertainty and COVID-19 effects, affected your expected capital spending for 2021 compared with 2020? Economic Policy COVID-19 Uncertainty Effects Significantly increase 5.0 0.0 Modestly increase 5.0 10.0 Subtotal 10.0 10.0 No change 67.5 35.0 Modestly decrease 20.0 30.0 Significantly decrease 2.5 17.5 Subtotal 22.5 47.5 *The firms provided more specific rates of utilization than shown in the provided ranges. Summary of Returns October 2020 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 15.0 46.8 34.1 14.5 32.3 56.6 65.7 22.5 3.0 62.7 Conditions New Orders 25.5 54.6 33.5 11.9 42.6 56.9 58.5 29.8 6.8 51.6 Shipments 36.6 57.4 30.1 10.9 46.5 47.9 63.4 19.8 11.8 51.7 Unfilled Orders 0.4 24.0 59.5 15.7 8.3 24.0 27.7 56.7 11.5 16.2 Delivery Times 12.2 25.0 70.6 4.4 20.5 7.2 12.3 71.8 10.3 1.9 Inventories -10.8 19.2 58.6 21.6 -2.5 11.4 31.8 47.1 15.6 16.2 Prices Paid 25.1 28.5 71.5 0.0 28.5 57.7 43.8 50.6 1.5 42.3 Prices Received 18.4 14.0 85.9 0.0 14.0 42.4 41.0 55.2 0.0 41.0 Number of Emp. 15.7 22.8 64.2 10.1 12.7 42.7 52.3 35.2 6.6 45.7 Avg. Emp. Wrkwk. 7.8 29.6 66.2 4.3 25.3 30.3 22.0 70.9 2.2 19.8 Capital Ex. -- -- -- -- -- 31.0 36.5 58.4 0.0 36.5 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 October 13, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: October 15, 2020, at 8:30 a.m. ET. September 2020 Note: Survey responses were collected from September 8 to September 14. Manufacturing activity in the region continued to expand this month, according to firms responding to the September Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the fourth consecutive month. The employment index improved in September and remained in positive territory for the third consecutive month. Nearly all of the future indexes increased, suggesting more widespread optimism among firms about growth over the next six months. Most Current Indicators Remain Positive The diffusion index for current activity fell 2 points to 15.0 in September, its fourth consecutive positive reading after reaching long-term lows in April and May. The percentage of firms reporting increases (33 percent) exceeded the percentage reporting decreases (18 percent). The index for new orders increased from 19.0 to 25.5. Nearly 42 percent of the firms reported increases in new orders this month, while 16 percent reported decreases. The current shipments index increased 27 points to 36.6 in September. Over 45 percent of the firms reported higher shipments this month, compared with 26 percent last month. On balance, the firms reported increases in manufacturing employment for the third consecutive month: The current employment index increased 7 points to 15.7 this month. Employment increases were reported by 31 percent of the firms, while 16 percent reported decreases. The average workweek index was positive for the third consecutive month but fell 4 points to 7.8. More Firms Report Increases in Prices The survey’s price indicators remained positive and increased this month. The prices paid diffusion index increased 10 points to 25.1. Nearly 29 percent of the firms reported increases in input prices, and 4 percent reported decreases; most firms (68 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, increased 6 points to 18.4. Over 22 percent of the firms reported increases in prices of their own manufactured goods, up from 16 percent in August. Firms Expect Higher Production During the Fourth Quarter In this month’s special questions, the firms were asked to estimate their total production growth for the third quarter ending this month along with expected growth for the fourth quarter. The share of firms reporting increases in third-quarter production (51 percent) was greater than the share reporting decreases (40 percent). The firms have yet to recover production losses experienced during the widespread closures in April and May. The firms indicated that third-quarter production was still 85 percent of pre-pandemic levels. Looking ahead to the fourth quarter, 62 percent of the firms expect an increase in production compared with the third quarter, while 29 percent of the firms expect decreases. For those firms forecasting an increase in production, 11 percent will need to hire additional workers, 20 percent will increase work hours without hiring additional workers, and 22 percent will increase production through higher productivity without hiring additional workers. Firms Are More Optimistic About Future Growth The respondents remained optimistic about growth over the next six months. The diffusion index for future general activity increased 18 points to 56.6 in September. The future new orders index rose 2 points and remained at an elevated reading of 56.9, while the future shipments index edged up 1 point to 47.9 this month. The firms continued to expect increases in employment over the next six months, as the future employment index increased 13 points. Nearly 46 percent of the firms expected higher employment, compared with 38 percent in August. The index for future capital spending increased 8 points to 31.0, with nearly 36 percent of the firms expecting to increase spending over the next six months. Summary Responses to the September Manufacturing Business Outlook Survey suggest continued recovery for the region’s manufacturing sector. The indicators for current activity, new orders, shipments, and employment all remained positive. The survey’s future indexes suggest more widespread optimism about manufacturing activity over the next six months. Special Questions (September 2020) 1. How will your firm's total production for the third quarter compare with that of the second quarter? Increase by: Percent of Reporters 10% or more 22.2 8–10% 6.7 6–8% 4.4 4–6% 8.9 2–4% 6.7 1–2% 2.2 Less than 1% 0.0 Subtotal 51.1 No Change 8.9 Decrease by: Less than 1% 0.0 1–2% 0.0 2–4% 6.7 4–6% 15.6 6–8% 0.0 8–10% 6.7 10% or more 11.1 Subtotal 40.0 No Response 0.0 Total 100.0 2. How does your production in the third quarter compare with pre-pandemic levels? Our production is about ___% of pre-pandemic levels. Median 85.0 3. For the upcoming fourth quarter, what do you expect for production at your plant compared with the third quarter? Increase: Percent of Reporters Significantly 6.7 Some 28.9 Slightly 26.7 Subtotal 62.2 No Change 8.9 Decrease: Slightly 8.9 Some 8.9 Significantly 11.1 Subtotal 28.9 No Response 0.0 Total 100.0 4. If you expect to increase production in the next quarter, this will be accomplished by: Percent of Reporters Hiring additional workers 11.1 Increasing work hours of current staff without hiring additional workers 20.0 Increasing productivity of current staff without hiring additional workers 22.2 Other 8.9 No Response 37.8 Summary of Returns September 2020 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 17.2 33.3 47.9 18.3 15.0 38.8 65.9 18.5 9.3 56.6 Conditions New Orders 19.0 41.7 42.1 16.2 25.5 55.1 72.4 11.7 15.5 56.9 Shipments 9.4 45.2 43.7 8.5 36.6 46.9 63.6 17.9 15.6 47.9 Unfilled Orders -0.6 13.1 74.2 12.7 0.4 18.0 33.2 54.5 9.2 24.0 Delivery Times 7.3 18.1 75.6 5.9 12.2 7.3 18.5 64.2 11.3 7.2 Inventories -1.9 10.9 65.4 21.7 -10.8 6.1 24.9 61.4 13.5 11.4 Prices Paid 15.3 28.6 67.8 3.5 25.1 37.7 57.7 39.0 0.0 57.7 Prices Received 12.4 22.2 73.9 3.8 18.4 30.2 42.9 51.4 0.5 42.4 Number of Emp. 9.0 31.3 51.5 15.6 15.7 29.5 45.9 47.7 3.2 42.7 Avg. Emp. Wrkwk. 11.3 18.5 69.9 10.8 7.8 19.1 37.7 52.4 7.4 30.3 Capital Ex. -- -- -- -- -- 23.0 35.6 56.8 4.6 31.0 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 September 14, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: September 17, 2020, at 8:30 a.m. ET. August 2020 Note: Survey responses were collected from August 10 to August 17. Manufacturing activity in the region continued to expand this month, according to firms responding to the August Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the third consecutive month but fell from their readings in July. The employment index also fell from its reading in July but remained in positive territory for the second consecutive month. Most of the future indicators remained elevated, suggesting that the firms expect growth over the next six months. Most Current Indicators Remain Positive The diffusion index for current activity fell 7 points to 17.2 in August, its third consecutive positive reading after reaching long-term lows in April and May. The percentage of firms reporting increases (28 percent) exceeded the percentage reporting decreases (11 percent). The index for new orders decreased from 23.0 to 19.0. Over 34 percent of the firms reported increases in new orders this month, while 15 percent reported decreases. The current shipments index fell 6 points to 9.4 in August. On balance, the firms reported increases in manufacturing employment for the second consecutive month, but the current employment index fell 11 points to 9.0 this month. Employment increases were reported by 23 percent of the firms, down from 29 percent in July. The average workweek index remained positive for the second consecutive month but fell 6 points to 11.3. Some Firms Report Increases in Prices The survey’s price indicators remained positive and were little changed this month. The prices paid diffusion index was essentially unchanged at 15.3. More than 21 percent of the firms reported increases in input prices, and 6 percent reported decreases; most firms (73 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, increased 1 point to 12.4. Over 16 percent of the firms reported increases in prices of their own manufactured goods, and 4 percent reported decreases; most firms (80 percent) reported no change. Firms Expect Own Prices to Match Rate of Inflation In this month’s special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms’ median forecast was for an increase of 2.0 percent, higher than the 1.0 percent that was forecast when the same question was last asked in May. The firms’ actual price change over the past year was 1.5 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters, an increase from 2.5 percent in the previous quarter. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was unchanged at 2.0 percent. The firms’ median forecast for the long-run (10-year average) inflation rate was 2.8 percent, a slight decrease from 3.0 percent in the previous quarter. Firms Remain Optimistic About Future Growth The respondents remained optimistic about growth over the next six months. The diffusion index for future general activity edged 3 points higher to 38.8 in August. The future new orders index ticked down 1 point and remained at an elevated reading of 55.1, while the future shipments index decreased 4 points to 46.9 this month. The firms continued to expect increases in employment over the next six months, although the future employment index edged down 3 points. Nearly 38 percent of the firms expected higher employment, while 8 percent expected lower employment. The index for future capital spending fell 4 points to 23.0, with roughly one-third of the firms expecting to increase spending over the next six months. Summary Responses to the August Manufacturing Business Outlook Survey suggest continued recovery for the region’s manufacturing sector. The indicators for current activity, new orders, shipments, and employment remained positive, although all decreased from their readings in July. The survey’s future indexes suggest that respondents continue to expect growth in manufacturing activity over the next six months. Special Questions (August 2020) Please list the annual percent change with respect to the following: Current Previous (May 2020) For your firm: Forecast for next year (2020Q3-2021Q3) 1. Prices your firm will receive (for its own goods and services sold). 2.0 1.0 2. Compensation your firm will pay per employee (for wages and benefits). 3.0 2.5 Last year's price change (2019Q3-2020Q3) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 1.5 0.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 2.0 2.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2020-2029). 2.8 3.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns August 2020 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 24.1 28.1 55.4 10.8 17.2 36.0 54.1 18.1 15.3 38.8 Conditions New Orders 23.0 34.1 50.9 15.1 19.0 55.6 62.1 27.2 7.1 55.1 Shipments 15.3 25.7 58.0 16.3 9.4 51.3 58.2 28.1 11.3 46.9 Unfilled Orders 3.9 21.4 56.5 22.0 -0.6 22.0 27.7 58.2 9.7 18.0 Delivery Times -6.4 19.2 68.9 11.9 7.3 10.5 21.5 58.9 14.2 7.3 Inventories -11.8 18.5 58.9 20.4 -1.9 8.9 29.7 42.7 23.6 6.1 Prices Paid 15.7 21.2 72.9 5.9 15.3 43.0 41.6 52.1 3.9 37.7 Prices Received 11.5 16.4 79.7 4.0 12.4 24.7 32.8 60.2 2.6 30.2 Number of Emp. 20.1 23.0 63.0 14.0 9.0 32.4 37.8 53.2 8.3 29.5 Avg. Emp. Wrkwk. 17.2 18.3 70.9 7.0 11.3 27.3 30.0 53.2 10.9 19.1 Capital Ex. -- -- -- -- -- 26.6 32.8 52.4 9.8 23.0 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 August 17, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: August 20, 2020, at 8:30 a.m. ET. July 2020 Note: Survey responses were collected from July 6 to July 13. Manufacturing activity in the region continued to expand this month, according to firms responding to the July Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments showed positive readings for the second consecutive month, coinciding with the phased reopening of the economy in our region. The employment index reached positive territory for the first time since March. Although future indicators for general activity, new orders, and shipments declined from last month's readings, the indexes remained elevated, suggesting that the firms expect overall growth over the next six months. Most Current Indicators Are Positive The diffusion index for current activity edged down 3 points to 24.1 in July, its second consecutive positive reading after reaching long-term lows in the spring. The percentage of firms reporting increases (45 percent) this month exceeded the percentage reporting decreases (21 percent). The index for new orders rose from 16.7 to 23.0. Nearly 47 percent of the firms reported increases this month, while 24 percent reported decreases. The current shipments index fell 10 points to 15.3 in July. Unfilled orders rose 4 points to 3.9, while delivery times fell 7 points to -6.4, suggesting shorter delivery times. The firms reported increases in manufacturing employment overall for the first time since March, as the current employment index rose 24 points to 20.1 this month, its highest reading since October. More than 29 percent of the firms reported increases (up from 12 percent last month), while 9 percent reported decreases (down from 16 percent). The average workweek index rose 24 points to 17.2, also reaching its first positive reading since March. Firms Report Overall Increases in Prices The prices paid diffusion index increased 5 points to 15.7. Nearly 16 percent of the firms reported increases in input prices, and none reported decreases; most firms (84 percent) reported no change. The current prices received index, reflecting manufacturers' own prices, held steady at 11.5. All Future Indicators Remain Positive The respondents remained optimistic about growth over the next six months. The diffusion index for future general activity fell 30 points to 36.0 in July. Roughly half of the firms reported increases this month (down from 75 percent last month), while 13 percent reported decreases (up from 9 percent). The future new orders index fell 12 points to 55.6, while the future shipments index decreased 14 points to 51.3 this month. The future inventories index rose 6 points to a reading of 8.9. The firms' expectations for future prices remained positive this month: The future prices paid index edged down 1 point to 43.0, and the future prices received index fell 4 points to 24.7. The firms continued to expect increases in employment over the next six months, with the future employment index edging up 3 points. Nearly 37 percent of the firms expected higher employment, while 4 percent expected lower employment. The firms' expectations for future capital spending held steady this month. Summary Responses to the July Manufacturing Business Outlook Survey indicated continued improvement in manufacturing activity. The indicators for current activity, new orders, and shipments remained positive for the second consecutive month, and the employment index reached positive territory for the first time since March. Both prices paid and prices received indexes remained positive. The survey's future indexes suggest that respondents continue to expect growth in manufacturing activity over the next six months. July 2020 July vs. June Six Months from Now vs. July Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 27.5 45.1 29.4 21.1 24.1 66.3 48.5 22.6 12.5 36.0 Conditions New Orders 16.7 46.7 29.4 23.7 23.0 67.9 66.0 19.2 10.4 55.6 Shipments 25.3 38.2 38.7 22.9 15.3 65.0 64.5 16.2 13.1 51.3 Unfilled Orders -0.1 16.9 68.9 12.9 3.9 31.5 28.3 58.9 6.4 22.0 Delivery Times 0.4 9.7 72.4 16.0 -6.4 18.5 25.6 55.0 15.1 10.5 Inventories 0.0 10.6 64.7 22.4 -11.8 2.9 28.5 49.3 19.6 8.9 Prices Paid 11.1 15.7 84.3 0.0 15.7 44.3 45.6 47.4 2.6 43.0 Prices Received 11.0 14.4 82.8 2.9 11.5 28.9 31.2 58.2 6.4 24.7 Number of Emp. -4.3 29.2 61.6 9.1 20.1 29.6 36.8 55.1 4.3 32.4 Avg. Emp. Wrkwk. -6.5 26.3 64.4 9.2 17.2 25.9 32.5 55.6 5.3 27.3 Capital Ex. -- -- -- -- -- 26.3 33.0 58.1 6.4 26.6 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 results reflect data received through July 13, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: July 16, 2020, at 8:30 a.m. ET. June 2020 Note: Survey responses were collected from June 8 to June 15. Manufacturing conditions in the region showed signs of improvement this month, according to firms responding to the June Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments returned to positive territory, coinciding with the gradual reopening of the economy in our region and the nation more broadly. The employment index remained negative but increased for the second consecutive month. All future indicators improved, suggesting that the firms expect overall growth over the next six months. Most Current Indicators Rebound The diffusion index for current general activity increased from -43.1 in May to 27.5 this month, its first positive reading since February. Forty-six percent of the firms reported increases this month (up from 15 percent last month), while 19 percent reported decreases (down from 58 percent). The indexes for current shipments and new orders also rose and returned to positive readings this month: The current new orders index increased 42 points to 16.7, while the shipments index rose 56 points to 25.3. The firms continued to report decreases in employment on balance; however, the employment index increased 11 points. The majority of responding firms (72 percent) reported steady employment levels, and the share reporting decreases (16 percent) exceeded the share reporting increases (12 percent). Firms Report Overall Increases in Prices The prices paid diffusion index increased 8 points to 11.1. The percentage of firms reporting increases in input prices (16 percent) was higher than the percentage reporting decreases (5 percent); most firms (79 percent) reported no change. The current prices received index, reflecting manufacturers' own prices, rose 14 points to a reading of 11.0, its first positive reading since March. Firms Report Lower Production and Capacity Utilization In this month's special questions, the firms were asked to estimate their total production growth for the second quarter ending this month compared with the first quarter of 2020. The share of firms reporting expected decreases in second-quarter production (78 percent) was greater than the share reporting increases (13 percent), and the median response was a decline of 25 to 30 percent. The firms were also asked about their current capacity utilization rate as well as their utilization rate one year ago. The median current capacity utilization rate reported among the responding firms was 70 to 80 percent, lower than the median rate of 80 to 90 percent reported one year ago. All Future Indicators Improve The diffusion index for future general activity increased 17 points from its May reading, reaching its highest level in nearly 30 years. Over 75 percent of the firms expect increases in activity over the next six months, while 9 percent expect declines. The future shipments and new orders indexes also improved, increasing 19 points and 13 points, respectively. The firms are optimistic overall about hiring over the next six months: The future employment index rose 13 points to 29.6, with over 36 percent of the firms expecting higher employment over the next six months. The future capital spending index improved 11 points to a reading of 26.3, near its average for last year. Summary Responses to the June Manufacturing Business Outlook Survey suggest improvement in regional manufacturing conditions compared with last month. The indexes for current activity, new orders, and shipments returned to positive territory after negative readings over the past few months. The survey's price indexes suggest positive pressure in both the prices of firms' inputs and manufactured goods. The survey's future indexes indicate that respondents expect growth over the remainder of the year. Special Questions (June 2020) 1. How will your firm’s total production for the second quarter of 2020 compare with that of the first quarter? % of firms An increase of: 20% or more 2.2 15–20% 0.0 10–15% 2.2 5–10% 4.4 0–5% 4.4 Subtotal 13.3 No change 8.9 A decline of: 0–5% 13.3 5–10% 11.1 10–15% 13.3 15–20% 13.3 20–25% 8.9 25–30% 11.1 30–35% 4.4 35–40% 0.0 40% or more 2.2 Subtotal 77.8 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2020:Q2) compared with a year ago (2019:Q2)? 2020:Q2 2019:Q2 % of reporters % of reporters Capacity Utilization Rate Less than 30% 2.2 2.2 30–40% 2.2 0.0 40–50% 4.4 0.0 50–60% 11.1 2.2 60–70% 24.4 10.9 70–80% 33.3 19.6 80–90% 20.0 28.3 90–100% 2.2 37.0 Median Utilization Rate 70–80 80–90 June 2020 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 -43.1 46.0 34.6 18.5 27.5 49.7 75.3 9.1 8.9 66.3 Conditions New Orders -25.7 41.5 32.9 24.8 16.7 54.7 76.4 10.8 8.5 67.9 Shipments -30.3 47.2 30.9 21.9 25.3 46.0 73.4 12.9 8.3 65.0 Unfilled Orders -13.7 25.1 49.2 25.1 -0.1 6.0 42.2 41.2 10.7 31.5 Delivery Times -6.7 12.9 74.4 12.5 0.4 5.1 26.7 59.8 8.2 18.5 Inventories 11.7 25.5 48.9 25.6 0.0 -1.4 31.1 36.8 28.2 2.9 Prices Paid 3.2 16.3 78.5 5.2 11.1 21.2 47.2 42.9 2.9 44.3 Prices Received -3.1 13.2 83.9 2.2 11.0 15.6 33.2 55.0 4.3 28.9 Number of Emp. -15.3 11.8 72.2 16.0 -4.3 16.2 36.4 52.4 6.8 29.6 Avg. Emp. Wrkwk. -7.1 12.1 69.2 18.7 -6.5 19.6 35.0 48.2 9.1 25.9 Capital Ex. -- -- -- -- -- 15.2 37.4 45.8 11.1 26.3 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 June 15, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: June 18, 2020, at 8:30 a.m. ET. May 2020 Note: Survey responses were collected from May 11 to May 18. Manufacturing firms reported continued weakness in regional manufacturing activity this month, according to results from the Manufacturing Business Outlook Survey. Despite remaining well below zero, the survey's current indicators for general activity, new orders, shipments, and employment rose this month after reaching long-term low readings in April. The firms expect the current slump in manufacturing activity to last less than six months, as the broadest indicator of future activity strengthened further from last month's reading; furthermore, the firms continue to expect overall growth in new orders, shipments, and employment over the next six months. Current Indicators Remain Negative but Climb from Long-Term Lows After reaching a 40-year low in April, the diffusion index for current general activity rose 13 points to -43.1, its third consecutive negative reading. The percentage of firms reporting decreases this month (58 percent) far exceeded the percentage reporting increases (15 percent). The index for new orders rose 45 points out of an all-time low for the series last month, from -70.9 to -25.7. Over 25 percent of the firms reported an increase in new orders, up from none in April, while 51 percent reported decreases, down from 71 percent last month. The current shipments index increased 44 points out of an all-time low last month, from -74.1 to -30.3. Unfilled orders held steady at -13.7, while delivery times fell 11 points to -6.7, suggesting shorter delivery times. The firms continued to report overall decreases in manufacturing employment this month, but the current employment index increased 31 points to -15.3. Nearly 9 percent of the firms reported higher employment, compared with none last month, while 24 percent reported decreases, down from 47 percent last month. The average workweek index increased 47 points to -7.1. Firms Report Increases in Prices of Their Inputs The prices paid diffusion index increased 13 points to 3.2. The percentage of firms reporting increases in input prices (16 percent) was higher than the percentage reporting decreases (13 percent). The current prices received index rose 8 points to a reading of -3.1, its second consecutive negative reading. Firms Expect Own Prices to Rise Slower Than Inflation In this month's special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms' median forecast was for an increase of 1.0 percent, lower than the 2.5 percent that was forecast when the same question was last asked in February. The firms' actual price change over the past year was 0.0 percent, down from 2.0 percent in the prior quarter. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 2.5 percent over the next four quarters, a decrease from 3.0 percent in the previous quarter. When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was unchanged at 2.0 percent. The firms' median forecast for the long-run (10-year average) inflation rate was 3.0 percent, an increase from 2.5 percent in the previous quarter. Most Future Indicators Remain Elevated Despite the current weakened conditions, the respondents remained optimistic about growth over the next six months. The diffusion index for future general activity rose 7 points to 49.7. Over 62 percent of the firms expect increases in activity over the next six months, while 13 percent expect declines. The future new orders index increased 18 points, while the future shipments index held steady this month. The future inventories index fell 15 points to a reading of -1.4. The firms' expectations for employment over the next six months remained positive but fell 10 points this month: Nearly 35 percent of the firms expect higher employment, while 18 percent expect lower employment. Summary Responses to the May Manufacturing Business Outlook Survey suggest a continued weakening in manufacturing activity this month. The indicators for current activity, new orders, shipments, and employment increased from their long-term low readings in April but remained negative. The survey's future indexes, however, remained elevated, suggesting that respondents expect growth in manufacturing activity to pick back up over a horizon of six months. Special Questions (May 2020) Please list the annual percent change with respect to the following: Current Previous (February 2020) For your firm: Forecast for next year (2020Q2-2021Q2) 1. Prices your firm will receive (for its own goods and services sold). 1.0 2.5 2. Compensation your firm will pay per employee (for wages and benefits). 2.5 3.0 Last year's price change (2019Q2-2020Q2) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 0.0 2.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 2.0 2.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2020-2029). 3.0 2.5 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns May 2020 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 -56.6 14.9 27.0 58.1 -43.1 43.0 62.4 19.0 12.8 49.7 Conditions New Orders -70.9 25.3 23.8 50.9 -25.7 36.5 64.8 16.3 10.1 54.7 Shipments -74.1 19.1 30.8 49.4 -30.3 46.0 55.9 22.3 9.9 46.0 Unfilled Orders -13.5 18.5 48.7 32.2 -13.7 17.0 23.2 49.1 17.2 6.0 Delivery Times 4.1 15.6 62.1 22.3 -6.7 1.4 17.9 58.9 12.8 5.1 Inventories -10.2 36.3 36.7 24.6 11.7 13.7 25.6 35.7 27.0 -1.4 Prices Paid -9.3 16.2 70.6 13.0 3.2 25.5 29.5 50.7 8.4 21.2 Prices Received -10.6 6.4 84.1 9.5 -3.1 16.9 24.3 59.5 8.7 15.6 Number of Emp. -46.7 8.5 64.4 23.8 -15.3 26.6 34.5 36.2 18.3 16.2 Avg. Emp. Wrkwk. -54.5 15.2 61.5 22.3 -7.1 26.0 27.5 52.3 8.0 19.6 Capital Ex. -- -- -- -- -- 12.4 29.1 44.7 13.9 15.2 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 results reflect data received through May 18, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: May 21, 2020, at 8:30 a.m. ET. April 2020 Note: Survey responses were collected from April 6 to April 13. Manufacturing firms reported continued weakening in regional manufacturing activity this month, according to results from the Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments once again fell sharply this month to long-term low readings, coinciding with ongoing developments related to the coronavirus pandemic. The indexes for employment and the average workweek, which had both remained positive last month, fell into negative territory this month. The firms expect the current letup in manufacturing activity to last less than six months, as the broadest indicator of future activity strengthened further from last month's reading; furthermore, the firms continue to expect overall growth in new orders, shipments, and employment over the next six months. Most Current Indicators Reach Long-Term Lows The diffusion index for current activity declined strikingly for the second consecutive month from -12.7 in March to -56.6 this month, falling below its nadir during the Great Recession. This is the current activity index's lowest reading since July 1980. The percentage of firms reporting decreases (60 percent) this month far exceeded the percentage reporting increases (4 percent). The index for new orders fell further into negative territory, from -15.5 to -70.9, its lowest reading ever. Also reaching an all-time low, the current shipments index fell 74 points after remaining slightly positive in March. Unfilled orders fell 6 points further into negative territory, while delivery times rose 13 points to 4.1, suggesting longer delivery times. The firms reported widespread decreases in manufacturing employment this month, as the current employment index fell 51 points to -46.7, its lowest reading since March 2009. The average workweek index fell 55 points to -54.5, its lowest reading ever. Firms Report Price Declines The firms reported overall negative price movements for inputs and for their own manufactured goods. The prices paid diffusion index decreased 14 points to -9.3, its lowest reading since May 2015. While most firms reported stable input prices (70 percent), the percentage of firms reporting decreases in input prices (18 percent) was higher than the percentage reporting increases (9 percent). The current prices received index, reflecting the manufacturers' own prices, declined 17 points to a reading of -10.6, its lowest since July 2009. Most Future Indicators Remain Elevated Despite the current weakened conditions, the respondents remained optimistic about growth over the next six months. The diffusion index for future general activity rose 8 points to 43.0, mostly offsetting a 10 point decline last month. Over 53 percent of the firms expect increases in activity over the next six months, while 10 percent expect declines. The future new orders index held steady, while the future shipments index increased by 4 points this month. The future inventories index edged down 3 points to a reading of 13.7. The firms' expectations for future prices remain positive this month: The future prices paid index rose 7 points to 25.5, and the future prices received index fell 5 points to 16.9. The firms' expectations for employment over the next six months moderated slightly, with the future employment index decreasing 3 points. Nearly 35 percent of the firms expected higher employment, while 8 percent expected lower employment. The firms' plans for future capital spending held steady this month after falling notably in March. Summary Responses to the April Manufacturing Business Outlook Survey indicated a continued prominent weakening in manufacturing activity. The indicators for current activity, new orders, and shipments continued their slide to long-term lows from relatively high readings earlier this year. Both prices paid and prices received indexes entered negative territory. The survey's future indexes, however, remained elevated, suggesting that respondents expect growth in manufacturing activity to pick back up over a horizon of six months. April 2020 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 -12.7 3.5 15.4 60.1 -56.6 35.2 53.4 7.3 10.4 43.0 Conditions New Orders -15.5 0.0 28.1 70.9 -70.9 36.7 54.7 19.1 18.2 36.5 Shipments 0.2 2.7 19.6 76.8 -74.1 41.8 60.1 14.6 14.1 46.0 Unfilled Orders -7.4 16.7 52.2 30.2 -13.5 15.0 34.0 37.4 17.0 17.0 Delivery Times -9.1 23.9 55.6 19.8 4.1 10.7 20.7 48.3 19.3 1.4 Inventories 1.7 21.3 44.9 31.5 -10.2 16.9 30.6 40.0 16.9 13.7 Prices Paid 4.8 8.7 70.0 18.0 -9.3 18.5 32.9 51.3 7.4 25.5 Prices Received 6.8 0.0 87.7 10.6 -10.6 21.5 25.1 54.5 8.1 16.9 Number of Emp. 4.1 0.0 52.5 46.7 -46.7 29.8 34.7 44.7 8.1 26.6 Avg. Emp. Wrkwk. 0.5 0.1 41.9 54.6 -54.5 14.5 37.9 40.7 11.8 26.0 Capital Ex. -- -- -- -- -- 12.0 28.2 41.1 15.9 12.4 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 April 13, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: April 16, 2020, at 8:30 a.m. ET. March 2020 Note: Survey responses were collected from March 9 to March 16. Manufacturing firms reported a significant weakening in regional manufacturing activity this month, according to results from the Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments fell precipitously this month, coinciding with developments related to the coronavirus. The firms reported a slight overall increase in employment, however, and a near-steady workweek. The broadest indicator of future activity weakened somewhat but remained elevated; however, firms still expect overall growth in new orders, shipments, and employment over the next six months. Firms Report Decreases in New Orders The diffusion index for current activity declined markedly from a three-year high reading of 36.7 in February to -12.7 this month, its lowest reading since July 2012. The percentage of firms reporting decreases (30 percent) this month exceeded the percentage reporting increases (18 percent). The index for new orders also turned negative, falling from 33.6 to -15.5. The current shipments index fell 25 points but remained slightly positive, although its current reading near zero suggests overall shipments were unchanged from February. Both the unfilled orders and delivery times indexes moved into negative territory this month, falling 15 points and 12 points, respectively. The firms reported an overall slight increase in manufacturing employment this month, but the current employment index decreased 6 points to 4.1, its lowest reading since November 2016. The average workweek index fell 10 points but remained slightly positive at 0.5. Firms Report Lower Price Pressures The firms reported moderating price pressures for inputs and for their own manufactured goods. The prices paid diffusion index decreased 12 points to 4.8. The percentage of firms reporting increases in input prices (18 percent) was only slightly higher than the percentage reporting decreases (14 percent). The current prices received index, reflecting the manufacturers' own prices, declined 10 points to a reading of 6.8. Most Future Indicators Moderated The diffusion index for future general activity fell 10 points to 35.2 but remained at a relatively high reading. Nearly 51 percent of the firms expect increases in activity over the next six months, while 16 percent expect declines. The future new orders and shipments indexes also decreased this month, by 17 points and 10 points, respectively. The firms expect their inventories to rise over the next six months, as the future inventories index rose 7 points to a reading of 16.9. The firms' expectations for future prices fell notably this month: The future prices paid index fell 14 points, and the future prices received index fell 16 points. The firms' expectations for employment over the next six months strengthened somewhat with the future employment index increasing 6 points. Over 30 percent of the firms expected higher employment, about the same as in February. Only 1 percent expected lower employment, down from February. The firms' plans for future capital spending showed notable weakening this month: The future capital spending index decreased nearly 18 points to a reading of 12.0, its lowest reading since September 2016. Summary Responses to the March Manufacturing Business Outlook Survey indicated a notable weakening in manufacturing activity. The indicators for current activity, new orders, and shipments decreased markedly from their readings in February. The survey's current employment and workweek indexes remained positive but also moderated. Both prices paid and prices received indexes reflected easing price pressures. The survey's future indexes suggest that respondents expect declines to be short-lived, inasmuch as they continue to expect growth in manufacturing activity over a horizon of six months. Summary of Returns March 2020 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 36.7 17.7 51.2 30.3 -12.7 45.4 50.7 29.1 15.5 35.2 Conditions New Orders 33.6 15.6 50.2 31.1 -15.5 54.0 49.1 34.7 12.4 36.7 Shipments 25.2 21.0 54.9 20.8 0.2 51.9 51.7 37.0 9.9 41.8 Unfilled Orders 7.4 11.4 69.9 18.7 -7.4 17.6 24.7 59.6 9.7 15.0 Delivery Times 2.7 4.6 81.3 13.7 -9.1 9.3 16.4 73.8 5.7 10.7 Inventories 11.8 22.3 56.9 20.6 1.7 10.2 32.1 46.0 15.1 16.9 Prices Paid 16.4 18.3 68.2 13.5 4.8 32.2 24.7 65.3 6.1 18.5 Prices Received 17.1 14.3 77.7 7.4 6.8 37.9 27.7 61.6 6.2 21.5 Number of Emp. 9.8 16.5 67.8 12.4 4.1 24.0 30.4 64.7 0.6 29.8 Avg. Emp. Wrkwk. 10.3 13.1 71.4 12.6 0.5 26.8 20.9 67.9 6.4 14.5 Capital Ex. -- -- -- -- -- 29.8 18.3 69.8 6.3 12.0 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 March 16, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: March 19, 2020, at 8:30 a.m. ET. February 2020 Manufacturing firms reported an improvement in regional manufacturing activity, according to results from the February Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments increased this month, suggesting more widespread growth. The firms reported expansion in employment, although at a moderated pace from January. The survey’s broad future indexes also showed improvement this month, indicating that growth is expected to continue over the next six months. Firms Report Increases in New Orders The diffusion index for current general activity rose nearly 20 points this month to 36.7, its highest reading since February 2017. The percentage of firms reporting increases (52 percent) this month exceeded the percentage reporting decreases (15 percent). The index for new orders increased 15 points to 33.6, its highest reading since May 2018. Over 50 percent of the firms reported an increase in new orders, up from 46 percent in January. The current shipments index increased 2 points. Both the unfilled orders and delivery times indexes moved into positive territory this month, suggesting slightly higher unfilled orders and slower delivery times. The firms reported overall increases in manufacturing employment this month, but the current employment index decreased 10 points to 9.8. Just 18 percent of the firms reported higher employment, compared with 28 percent last month. The average workweek index, however, increased 5 points. Firms Report Slight Softening of Input Price Pressures The firms continued to report overall increases in prices paid for inputs and received for goods. The prices paid diffusion index decreased 6 points to 16.4. The percentage of firms reporting increases in input prices (23 percent) remained higher than the percentage reporting decreases (7 percent). The current prices received index, reflecting the manufacturers’ own prices, edged up 2 points to a reading of 17.1. Firms Still Expect Own Prices to Rise Faster Than Inflation In this month’s special questions, the 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 firms’ median responses were identical to those in the previous quarter. Regarding their own prices, the firms’ median forecast was for an increase of 2.5 percent, unchanged from the previous forecast in November. The firms’ actual price change over the past year was 2.0 percent. The firms continued to expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was unchanged at 2.0 percent. The firms’ median forecast for the long-run (10-year average) inflation rate remained at 2.5 percent. Most Future Indicators Show Improvement The diffusion index for future general activity rose 7 points to 45.4, its fifth consecutive month of improvement. Nearly 56 percent of the firms expect increases in activity over the next six months, while 10 percent expect declines. The future new orders and shipments indexes also increased this month, by 12 points and 10 points, respectively. The firms’ expectations for employment over the next six months remained positive but were little changed this month: Over 31 percent of the firms expect higher employment; 7 percent expect lower employment. The future capital spending index decreased 3 points to a reading of 29.8. Summary Responses to the February Manufacturing Business Outlook Survey suggest a pickup in growth in manufacturing activity this month. The indicators for current activity, new orders, and shipments increased from their readings in January. The survey’s current employment index remained positive but moderated this month. The survey’s future indexes indicate that respondents continue to expect growth in manufacturing activity over the next six months. Special Questions (February 2020) Please list the annual percent change with respect to the following: Current Previous (November 2019) For your firm: Forecast for next year (2020Q1-2021Q1) 1. Prices your firm will receive (for its own goods and services sold). 2.5 2.5 2. Compensation your firm will pay per employee (for wages and benefits). 3.0 3.0 Last year's price change (2019Q1-2020Q1) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 2.0 2.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 2.0 2.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2020-2029). 2.5 2.5 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns February 2020 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 17.0 51.8 33.1 15.1 36.7 38.4 55.6 31.6 10.2 45.4 Conditions New Orders 18.2 50.3 33.0 16.7 33.6 41.9 62.9 25.2 9.0 54.0 Shipments 23.4 44.0 37.1 18.8 25.2 42.4 60.0 28.7 8.1 51.9 Unfilled Orders -3.7 21.8 61.6 14.3 7.4 17.9 29.5 57.5 11.9 17.6 Delivery Times -0.4 12.6 77.4 10.0 2.7 2.7 16.3 75.6 6.9 9.3 Inventories -2.3 25.4 58.2 13.7 11.8 10.1 27.2 52.8 17.1 10.2 Prices Paid 22.1 23.4 68.0 7.0 16.4 41.9 38.1 52.4 5.8 32.2 Prices Received 14.7 18.4 78.3 1.4 17.1 34.0 41.5 52.2 3.6 37.9 Number of Emp. 19.3 18.0 73.7 8.1 9.8 24.3 31.3 57.9 7.3 24.0 Avg. Emp. Wrkwk. 5.2 18.5 73.3 8.2 10.3 13.2 34.9 54.7 8.1 26.8 Capital Ex. -- -- -- -- -- 32.9 33.9 55.1 4.1 29.8 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 February 18, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: February 20, 2020, at 8:30 a.m. ET. January 2020 Manufacturing activity in the region increased this month, according to results from the January Manufacturing Business Outlook Survey. The survey’s indicators for current activity, new orders, shipments, and employment were all positive and increased from their readings in December. The survey’s future activity indexes remained at relatively high readings, suggesting continued optimism about growth for the next six months. Current Indicators Improved This Month The diffusion index for current general activity increased nearly 15 points this month, from a revised reading of 2.4 in December to 17.0.* The percentage of the firms reporting increases (39 percent) was greater than the percentage reporting decreases (22 percent). The indexes for current shipments and new orders also moved higher: The current new orders index increased 7 points, and the shipments index increased 8 points. The indexes for unfilled orders and delivery times changed from positive to negative readings this month, suggesting decreased unfilled orders and shorter delivery times. On balance, the firms also reported a slight decline in inventories. Manufacturers continued to report expanding employment this month. The employment index increased 3 points to 19.3. Nearly 28 percent of the firms reported higher employment, while 9 percent reported lower employment. The average workweek index remained positive but edged down 3 points. Price Indexes Edge Higher The firms continued to report overall increases in the prices paid for inputs, with the index rising 6 points to 22.1. Nearly 27 percent of the respondents reported higher input prices; only 5 percent reported lower input prices. The largest percentage of the firms (68 percent) reported steady input prices. The current prices received index, reflecting the manufacturers’ own prices, increased 4 points to 14.7. More than 18 percent reported higher prices for their manufactured products, 3 percent reported lower prices, and over 78 percent reported no change in their prices. Firms Expect to Increase Production in the Near Term In the Special Questions this month, the firms were asked to characterize demand for their products over the past few months and to forecast their production for the first quarter of the year. Most firms (44 percent) reported an increase in underlying demand, but 31 percent characterized underlying demand as decreasing in recent months. Over 62 percent of the firms anticipate increasing production in the first quarter, while 33 percent expect decreases. Among the firms expecting an increase in production, 25 percent indicated that this would be accomplished with additional workers. But most indicated higher production would be accomplished without additional hiring: Thirty-three percent would increase the hours of existing workers, while 36 percent indicated production could be increased with higher productivity of existing workers. Firms Remain Generally Optimistic The diffusion index for future general activity edged up 4 points, from a revised reading of 34.8 in December to 38.4 in January. More than 49 percent of the firms expect increases in activity over the next six months, while 11 percent expect declines. The future new orders and shipments indexes also increased, by 8 points and 4 points, respectively. The future employment index decreased 3 points this month, but the firms remain optimistic about future hiring overall: One-third of the firms expect higher employment over the next six months. The firms were more optimistic about future capital spending: The future capital expenditures index increased 7 points, with 39 percent expecting higher capital spending over the next six months. Summary The January Manufacturing Business Outlook Survey indicated growth in the region’s manufacturing sector this month. All of the survey’s broad indicators remained positive and increased from their readings in December. The survey’s future indexes indicate that respondents continue to expect growth over the next six months. * The survey’s annual historical revisions, which incorporate new seasonal adjustment factors, were released on January 9, 2020. The full set of revised historical data is available at www.philadelphiafed.org/mbos-histrev2020. Special Questions (January 2020) 1. Over the past several months, how would you characterize the underlying demand for your manufactured products? Exclude any purely seasonal effects. % of firms Significant increase 8.5 Modest increase 35.6 Subtotal 44.1 No change 25.4 Modest decrease 23.7 Significant decrease 6.8 Subtotal 30.5 2. How will your firm's total production for the first quarter of 2020 compare with that of the last quarter of 2019? An increase of: 10% or more 5.2 8-10% 5.2 6-8% 1.7 4-6% 8.6 2-4% 22.4 1-2% 17.2 less than 1% 1.7 Subtotal 62.0 No change 5.2 A decline of: less than 1% 1.7 1-2% 12.1 2-4% 3.4 4-6% 5.2 6-8% 1.7 8-10% 1.7 10% or more 6.9 Subtotal 32.7 3. If you expect to increase production in the next quarter, this will be accomplished by: % of firms Hiring additional workers 25.0 Increasing work hours of current staff, without hiring additional workers 33.3 Increasing productivity of current staff, without hiring additional workers 36.1 Other 5.6 Summary of Returns January 2020 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 2.4 38.5 38.1 21.5 17.0 34.8 49.2 35.9 10.8 38.4 Conditions New Orders 11.1 45.7 26.9 27.5 18.2 33.6 53.8 29.7 12.0 41.9 Shipments 15.7 42.3 37.8 18.9 23.4 38.7 55.5 26.0 13.1 42.4 Unfilled Orders 8.6 14.4 61.9 18.1 -3.7 12.5 29.1 56.0 11.2 17.9 Delivery Times 12.5 9.1 75.8 9.4 -0.4 -1.3 11.9 75.4 9.2 2.7 Inventories 5.0 22.3 50.1 24.6 -2.3 6.0 23.5 57.0 13.5 10.1 Prices Paid 15.9 26.9 67.7 4.8 22.1 46.0 43.3 49.4 1.4 41.9 Prices Received 11.0 18.1 78.3 3.4 14.7 45.1 36.2 58.4 2.2 34.0 Number of Emp. 16.8 27.7 62.1 8.5 19.3 27.4 33.3 53.9 9.0 24.3 Avg. Emp. Wrkwk. 8.5 16.5 68.8 11.3 5.2 17.5 23.2 62.0 10.0 13.2 Capital Ex. -- -- -- -- -- 26.0 39.1 52.6 6.2 32.9 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 January 13, 2020. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: January 16, 2020, at 8:30 a.m. ET.