The Federal Reserve Bank of Philadelphia is better known for its regional manufacturing report than its nonmanufacturing report. Still, last week’s stellar manufacturing report for September is considered a live number and investors are looking for any economic strength they can find.
Tuesday’s economic reports included the September Nonmanufacturing Business Outlook Survey for the region. Business activity in the region’s nonmanufacturing sector grew at a slightly slower pace. The diffusion index for current activity at the firm level fell from 19.5 in August to 16.7 in September.
Last week’s manufacturing index was supposed to only come in at 2.0, but instead it came in at a sharp 12.8 — higher than every single estimate in the −3.0 to 4.9 Econoday range.
The overall tone was still cautiously positive. Most respondents to September’s survey were optimistic about growth over the next six months. The official statement said:
The survey’s indexes for current general activity at the firm level and in the region remained positive but suggest a continuation of a slight softening in the region. In addition, firms reported slower growth in sales and new orders. The index for full-time employment rose, however. Firms reported stronger increases in prices for inputs than in prices received for their goods and services. Despite declines in the survey’s current activity indicators, the respondents expressed greater optimism about activity over the next six months.
Tuesday’s report shows the full data. These showed firms reporting lower growth, new orders and sales weakening, full-time employment improving, prices paid were up, capital spending looks higher, future optimism remained high.
This is one of those reports that might otherwise be overlooked. That being said, this is the start of the Federal Open Market Committee (FOMC) meeting and Fed presidents need all the data they can get their hands on before following through (or not) with need and desire to raise interest rates.