Philly Fed Outlook +51.8 in March, much above consensus

Manufacturing conditions in the region strengthened further this month, according to firms responding to the March Manufacturing Business Outlook Survey. The indicators for general activity and new orders rose sharply, and the shipments and employment indexes also increased. Price pressures also rose, according to the surveyed firms. All of the survey’s indexes for future conditions increased, as the firms indicated more widespread optimism about growth over the next six months.

Current Activity Index Hits 50-Year High

The index for current manufacturing activity in the region jumped from a reading of 23.1 in February to 51.8 this month, its highest point in nearly 50 years (see Chart 1). Nearly 59 percent of the firms reported increases in current activity this month (up from 35 percent last month), while only 7 percent reported decreases (down from 11 percent). The current new orders index also increased substantially to a 50-year high, rising 28 points to 50.9 in March. The current shipments index increased 9 points to 30.2.

The firms continued to add to their payrolls this month. The current employment index increased from a reading of 25.3 in February to 30.1 this month. Nearly 32 percent of the responding firms reported increases in employment, while only 1 percent of the firms reported decreases. The current workweek index increased 9 points to 39.7.

Price Increases Are More Widespread

The firms continued to report price pressures from purchased inputs. The prices paid index rose sharply from 54.4 to 75.9, its highest reading since March 1980 (see Chart 2). Over 77 percent of the firms reported higher input prices this month, up from 55 percent last month. With respect to prices received for firms’ own manufactured goods, 35 percent of the firms reported higher prices, up from 18 percent last month. The prices received index increased 15 points to 31.8.