Philadelphia Fed Shows Nonmanufacturing Stays Stronger Than Manufacturing

The Federal Reserve Bank of Philadelphia showed last week in its Business Outlook Survey a drop in the April general business conditions for manufacturing. It was expected that the gains seen in March would continue, a clear disappointment. Now the Philly Fed is out with a report on the nonmanufacturing segment that signals that growth remains in place.

The pace of activity in the region’s nonmanufacturing sectors remained positive in April, according to the Philly Fed’s Nonmanufacturing Business Outlook Survey. Data were not universally positive, but the net number came out that way.

The diffusion index for current activity at the firm level was at 17.8 for the month of April, which was virtually unchanged from its March reading. Firms responding to the survey were more optimistic about general business activity in the region as a whole over the next six months, while businesses were even more optimistic about the prospects for their individual firms.

An overall target would indicate that modest growth continues. Still, the sales/revenues and new orders indexes declined, while the indexes for employment were steady.
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A summary was listed as follows:

• The diffusion index for current activity at the firm level stands at 17.8, virtually unchanged from its March reading.
• The proportion of respondents reporting no change in activity at their firms this month rose 3 points, to 39 percent.
• The diffusion index for current activity for the region also held steady at 13.5 in April, as the proportion of firms reporting no change in regional activity rose 8 points, to 50 percent.
• The index for current activity at the firm level has been below its historical average of 29.3 for six consecutive months, and the index for current activity for the region has been below its historical average of 23.3 for four consecutive months.
• The current index values suggest that modest growth continues for nonmanufacturers in the region.
• The new orders index fell 3 points, to 13.9.
• The sales/revenues index fell 9 points, to 9.6.
• The unfilled orders index held relatively steady at 6.2.
• The full-time employment index rose 1 point, to 7.5.
• The share of firms reporting no change in full-time employment stands at 65 percent.
• The part-time employment index rose 2 points, to 10.5, and the share of firms reporting no change in part-time employment rose 9 points, to 62 percent.
• The workweek index rose 19 points, to 24.8.
• A higher share of firms reported an increase in the workweek, from 21 percent in March to 36 percent in April, with a corresponding 15 percent decline in the share of firms reporting no change in the workweek.
• The index for wages and benefits rose 21 points, to 40.3.
• The prices paid index rose 8 points, to 10.9.
• Twenty percent of the firms reported higher prices paid in April, up 12 points from March.
• The prices received index fell 10 points, to 13.9.
• The share of firms reporting an increase in prices received fell 8 points to 18 percent.