Philly Fed Index Rises, Beats Consensus

The Philadelphia Fed's index has bolted back to the top of the regional manufacturing reports in recent months, at 10.4 in November and beating Econoday's consensus for the fourth time in five months.

New orders have been on a tear in this sample, averaging 23.9 in the prior four reports though slowing sharply to 8.4 in today's report. Yet November's orders are still solidly in the plus column to indicate significant growth relative to October. Backlog orders have also been on the rise, at plus 6.0 in the latest report and compared with 18.8 and 17.6 in October and September. Given this large build, employment not surprisingly is very strong in the sample, at 21.5 and 32.9 in November and October.

Shipments are moving out the door, delivery times are lengthening, and inventories, likely due to the strong production activity, are being drawn down. Price readings, despite all the strength, are indicating moderating upward pressure.

Amid the recent surge in this report, some volatility in the readings may be appearing and fairly raise the question whether monthly sample sizes have been low and uneven. But at face value, this report is pointing to significant year-end acceleration for a manufacturing sector that hasn't had a good year at all.