Philly Fed Manufacturing Sample Better-Than-Expected

Ongoing strength not weakness is the signal from the Philadelphia Fed's manufacturing sample where September's headline index came in at a better-than-expected 12.0. New orders held steady in the mid-20s, at 25.8 which is very strong and which will support composite activity in the next report for October.

But there is one signal of moderation in today's report and that's the 6-month outlook which fell nearly 12 points to 20.8 which is modest for this reading. Confidence in future orders is down sharply this month, perhaps reflecting persistent questions over slowing global trade and slowing foreign demand for US goods.

Yet the sample is adding employees, unfilled orders are building and supplier delivery times are slowing, all consistent with healthy activity. Further signs of strength come from an increase in the workweek and are capped by an 8 point rise in input prices to 20.8 and the highest reading this year. Current indications in this report for the last three months have been posting the best readings of the year and offered an accurate indication for the surprising strength in Tuesday's industrial production report.

This report is showing better strength for the factory sector than the Federal Reserve's current assessment which is one of caution. Yet the report's guarded outlook is in line with Fed concerns. Nevertheless today's report, on net, offers more good news than bad news for US manufacturing.