Every month, I give a breakdown of the regional FED surveys like the Philadelphia FED Manufacturing Survey. I do this because they add valuable information to the big economical puzzle. In addition to that, they are leading the ISM index. These indicators are able to predict the direction of the ISM index and are very reliable once all regional surveys are put together at the end of each month.
Source: Federal Reserve
This article gives a breakdown of all important parts of the Philadelphia FED survey, conducted in the FED's Philadelphia district.
First, let's start with the composite index. After the very bad Empire State report (6 months low), we also see that Philadelphia is a bit lower. The biggest difference with the Empire State report is that Philadelphia remains at relatively high levels. This does not support the case for a sudden economic slowdown but more like a moderate slow down after a very strong month.
Now, let's look at some of the parts of this report. I use new orders, shipments and such to get a better insight of this report which might support a stronger or weaker reading.
New orders support the case for stronger short term growth. New orders hit a new post-slow down high after an extremely weak print in September.
Shipments show the same pattern. A very strong month after multiple volatile months with both steep declines and big jumps.
Employment keeps disappointing. Today, we got the tenth consecutive month with contraction. The employment slow down after the 2014 peak has resulted in a period of contraction. Numbers like these keep putting tremendous pressure on the official NFP numbers.
Overall, this report shows us that overall growth in the Philadelphia district has halted in October. It also shows that underlying fundamentals like shipments and orders are doing better. Unemployment remains very weak. The fact that orders and shipments have been extremely volatile since the start of the slow down make it clear that we should look at the composite index and focus on stronger and weaker trends among survey parts. This means that the economy is doing a bit better than a few months ago but is still far from a strong recovery.
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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.