Strong Recovery in Manufacturing Still Underway, Philly Fed Survey Highest Since 1984
March 2011 Business Outlook Survey
Results from the Business Outlook Survey suggest that regional manufacturing activity continued to show improvement in March. The survey's broadest indicators either improved from their readings in February or remained at relatively high levels. Increases in input prices continue to be widespread, and more firms have been reporting increases in prices for their manufactured goods in recent months. The survey's broad indicators of future activity also showed notable improvement this month. Most firms also indicated that they expect acceleration in production over the next quarter.
Indicators Suggest Growth Picked Up
The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 35.9 in February to 43.4 this month (see Chart). This is the highest reading since January 1984. The demand for manufactured goods is showing continued strength: The new orders index increased 17 points this month, the sixth consecutive monthly increase. The shipments index was little changed this month and remains at a high level. Firms also reported that unfilled orders and delivery times rose again this month. Twice as many firms reported increases in inventories this month (24 percent) than reported decreases (12 percent). And the current inventory index has now been positive for three consecutive months and is at its highest reading in four years.
Manufacturing Outlook Improves
The future general activity index increased 16 points, to a reading of 63.0, its highest reading since February 1993 (see Chart). The indexes for future new orders and shipments also improved, increasing 18 and 8 points, respectively. Continuing to reflect optimism about employment expansion in the manufacturing sector, the future employment index increased 6 points. More firms expect to increase employment over the next six months (33 percent) than expect to decrease employment (2 percent).
Industrial Production (US)