Philly Fed Report Shows More Strength

The Philly Fed report continues to post very unusual levels of strength. October's headline of 27.9 is nearly 8 points above Econoday's consensus and more than 2 points above the high estimate. Employment, at 30.6, is a record in 48 years of this report's data. The unusual strength of demand together perhaps with lingering hurricane effects on the supply chain are making for the longest delivery delays on record, at 21.6.

Other October readings are also unusually strong but less so than September: new orders 19.6 vs September's 29.5, unfilled orders at 10.9 vs 17.0, shipments 24.4 vs 37.8, the 6-month outlook 46.4 vs 55.2. Philly's sample is building up inventories while price data show a 7-month high for inputs costs, at 38.1, but a dip back in selling prices to a still very solid 14.2.

This report together with Empire State's report on Monday are extensions of what have been unusually strong indications from regional reports, results that contrast sharply with much less strength in factory orders and outright contraction in manufacturing production. It's important to remember that regional reports are based on small sizes where responses are always voluntary. Still the strength of the regional reports, if nothing else, is pointing squarely at improvement ahead, at least to some degree, for the nation's factory sector.

Recent History Of This Indicator
There are no words left to describe the intensity of strength being report by respondents to the Philly Fed manufacturing report. The headline, at 23.8 in September and well beyond Econoday's high estimate, only scratched the surface as new orders poured in at one of the strongest rates of the expansion with backlog orders and shipments among the very strongest in the 50-year history of this report. The consensus for the October index is 20.2.