US Manufacturing Jumps to 33-Year High

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The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed's National Activity Index.

The latest Manufacturing Index came in at 43.3, up from last month's 23.6. The 3-month moving average came in at 28.9, up from 17.3 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 56.6, an increase over the previous month's 48.7.

Today's 43.3 came in well above the 18.0 forecast at Investing.com.

Here is the introduction from the survey released today:

Results from the February Manufacturing Business Outlook Survey suggest that growth in regional manufacturing is broadening. The diffusion indexes for general activity, new orders, and shipments were all positive this month and increased notably from their readings last month. The surveyed firms continued to report growth in employment and work hours. Although they moderated from last month, the future indexes for growth over the next six months continued to reflect a high degree of optimism. (Full Report)

The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011 and 2012, and a shallower contraction in 2013. 2015 saw a contraction with an improvement in 2016.

In the next chart, we see the complete series, which dates from May 1960. For proof of the high volatility of the headline indicator, note that the average absolute monthly change across this data series is 7.7.

fed manufacturing

The next chart is an overlay of the General Activity Index and the Future General Activity Index — the outlook six months ahead.

recesssions

For comparison, here is the latest ISM Manufacturing survey.

ISM manufacturing

Let's compare all five Regional Manufacturing indicators.Here is a three-month moving average overlay of each since 2001 (for those with data).

regional manufacturing

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.

empire state philadelphia

Here are the remaining four monthly manufacturing indicators that we track:

Texas Manufacturing Outlook Survey (TMOS)

Kansas City Manufacturing Survey

Empire State Manufacturing Survey

Fifth District Manufacturing Survey (Richmond)

Regional Fed Overview

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About Jill Mislinski

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