07192019Fri
Last updateFri, 19 Jul 2019 2pm

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Demand Up in Philadelphia Fed Survey

Manufacturing conditions in the region showed improvement this month, according to firms responding to the July Manufacturing Business Outlook Survey from the Philadelphia Federal Reserve. The survey’s indexes for general activity, new orders, shipments, and employment remained positive and increased from their June readings. Most of the survey’s future activity indexes increased, suggesting improved optimism about growth for the next six months.


Beige Book: Modest Growth Despite Widespread Trade Concerns

Economic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period. The outlook generally was positive for the coming months, with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty.

Manufacturing production was generally flat, but a few Districts noted a modest pickup in activity since the last reporting period.

Manufacturing Output Rose in June

Industrial production was unchanged in June, as increases for both manufacturing and mining offset a decline for utilities. For the second quarter as a whole, industrial production declined at an annual rate of 1.2%, its second consecutive quarterly decrease. In June, manufacturing output advanced 0.4%.

Despite the gains in the past two months, factory production declined at an annual rate of 2.2% in the second quarter, about the same pace as in the first quarter. In June, the indexes for durables and for nondurables advanced 0.4% and 0.5%, respectively.

Small Business Optimism Reverses Last Month’s Gain

Optimism faded modestly in June, with the Small Business Optimism Index slipping 1.7 points to 103.3, reversing the gain posted in May but still leaving optimism at historically high levels. The main driver came from the inventory sector, with owners marking existing stocks as very “lean” and planning to add to them. Sales and earnings trends softened, expected credit conditions remained favorable. Uncertainty levels increased, as expectations for sales gains and general business conditions faded.

Some “tariff” Inflation pressures may be surfacing as the percentage of firms raising selling prices rose significantly with 30% of owners reporting recent changes in China trade policy negatively impacting their business. Job openings and plans to create jobs weakened a bit but remain historically very strong. Reports of higher worker compensation also cooled.

Machine Tool Orders Post Modest Gains in May

U.S. manufacturing technology orders rose to $378.4 million in May, an increase of 7.3% over the previous month. Orders for metal cutting technologies grew 4.5% while forming and fabricating technologies increased 64.8% over the previous month and 117% over May 2018.

Despite the modest uptick in total orders from April, orders are down nearly 22% from May 2018, when orders totaled $484.2 million. The year-to-date total for 2019 increased to $1,867 million, a 13.5% decline from the 2018 total through May.

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