Solid Strength In Philly Fed Manufacturing Report

Solid strength finally appears in the details of the Philly Fed manufacturing report where new orders and shipments are both stand outs this month. The headline index for October is a solid 9.7 and follows two months of gains including a year-and-a-half high of 12.8 in September.

But the headline index, which is not a composite, had been sending signals of strength that were not backed up by details in the report. Not anymore. Month-to-month growth in new orders, at 16.3 in October, is the strongest since November 2014 while shipments, at 15.3, are the second strongest since November 2014. Employment, at minus 4.0, is still in contraction but is the best reading since May.

There are weaknesses in the report, including continuing though slowing contraction in the workweek and easing confidence in the general outlook, but the strength in new orders points to wider strength ahead for the Mid-Atlantic manufacturing sector. These results, however, do contrast with weakness in the Empire State report earlier this week, setting up what should be an especially interesting run of anecdotal reports this month.

Recent History Of This Indicator:
The Philadelphia Fed index shot nearly 11 points higher in September to 12.8 but forecasters are calling for slowing in the October report to plus 7.0. New orders have been weak as have many other readings, including employment. The headline for this report does not always move in line with the details.