Philadelphia Fed Business Outlook Survey Good For Industrial Production

Yesterday's industrial production report offered surprisingly good news on the factory sector during February with today's Philly Fed report offering similar news for March. The Philly Fed's general conditions index has emerged from a long negative run with a much stronger-than-expected March reading of plus 12.4. Importantly, strength is confirmed by new orders which literally surged to plus 15.7 from minus 5.3 in February. Contraction in unfilled orders is now only marginal at minus 1.9 which is another good sign.

Shipments are especially strong, at 22.1 for a nearly 20-point gain and hinting at another strong month for the manufacturing component of the industrial production report. Employment is still negative, at minus 1.1, but is improving from prior readings. Price readings are still weak though selling prices are back in the positive column at a modest plus 3.5.

This report confirms similar strength in Tuesday's Empire State report and should raise talk that the worst may be over for the factory sector, where weak exports and demand for energy equipment have taken a long toll.

Recent History Of This Indicator:
The Philadelphia Fed manufacturing index is expected to extend a long series of declines with the Econoday forecast calling for a minus 1.4 March headline. At minus 2.8 in February, last month's reading was the sixth negative score in a row with the new orders index falling back to minus 5.3. Inventories have been down in this report and the six-month outlook has been easing, both pointing to defensive business expectations.