Philly Fed Manufacturing Survey Modest At Most

A vast surge of demand is hidden by the Philadelphia Fed's manufacturing index which at 5.6 for October looks modest at the very most. But this index, unlike most other headline diffusion indexes, is not a composite of components but a measure, based on a single question, of general conditions. Order readings in the report are in fact exceptionally strong, at 26.2 in October following 24.8 in September. The strength here is leading to an unusually large build for unfilled orders which are at 18.8 versus September's 17.6.

Big moves for orders are a plus for employment which is already surging for this sample, at 32.9 and more than doubling September's already very strong 15.8. Shipments are at 20.3 and look to move higher in line with orders. Price pressures eased in the month in a contrasting signal of softening demand though once orders are converted to production, these pressures for this sample may well rise.

Volatility tied to low sample size (data that are not released) is always a risk with anecdotal surveys yet respondents to this survey are reporting great strength in orders that may well signal a lift for other anecdotal reports, like the ISM, and may be pointing to an unexpected year-end rebound for the manufacturing sector.