The Federal Reserve Bank of Philadelphia has released its Business Outlook Survey for the month of October. The report suggested continued expansion of the region’s manufacturing sector. Firms reported continued increases in new orders but slower growth in activity, shipments and employment this month.
The index for current activity moved down to a reading of 20.7 from 22.5. Bloomberg had a consensus estimate of 20.0. All in all, this is a positive report that was above estimates, even if it was marginally lower than the prior reading.
Over 34% of the firms reported an increase in activity and almost 14% reported a decrease in activity. The current shipments and employment indexes declined but overall remained positive. The current new orders index increased two points. Inventories increased for firms in October, as seen in the current inventory index, up nine points to its highest reading in 10 months.
Labor market conditions suggest some moderation in employment growth. Despite being positive for the 16th consecutive month, the employment index fell nine points. Approximately 20% of firms reported increases in employment, while 8% reported decreases.
Input price pressures were reported to be nearly the same from the previous month. The prices paid index was nearly unchanged from September. Over 29% of the firms reported higher input prices, while 2% reported lower input prices.
In regards to prices of manufactured goods, 21% of the firms reported higher prices, up from 13% last month. The prices received index increased 12 points, to 20.8, its highest reading since April 2011.
The future index for new orders held steady, but the future shipments index decreased seven points. Firms pulled back their expectations about employment growth over the next six months. Nearly 33% of the firms are expecting growth in their employment levels over the next six months, compared to 44% last month. The future employment index decreased to 28.0 from 39.6.
The average capacity utilization rate among the firms polled was over 78%, which was an increase from the last year at 76.5%.