Philly Fed Mfg Index: Activity Weakens in June

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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 -3.3, down 5.9 from last month's 2.6. The 3-month moving average came in at 5.6, down from last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at -6.8, down from the previous month's 2.5.

The -3.3 headline number came in below the 5.5 forecast at Investing.com.

Here is the introduction from the survey:

Manufacturing activity in the region weakened, according to the firms responding to the June Manufacturing Business Outlook Survey. The indicators for current activity and new orders turned negative, and the shipments index also declined but remained positive. However, the firms reported continued increases in employment. Both price indexes declined but remained elevated. Expectations for growth over the next six months deteriorated, as the future general activity, new orders, and shipment indexes fell sharply. (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, 2012, and 2015, and a shallower contraction in 2013. The contraction due to COVID-19 is clear in 2020.

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 8.1.