Philadelphia Federal Reserve: Very Slow Growth, Poor Employment

The Philadelphia Federal Reserve, or the Philly Fed, is out with its monthly report on business for the month of April. As the Business Outlook Survey is a somewhat live reading, we pay attention to the report. The index indicator for overall activity remained slightly positive this month at 2.5. Bloomberg was expecting a reading of 3.3, with a range of 0.0 to 6.5 from its pool of economists.

Prices paid fell to 3.1 from 8.5, while prices received fell to -7.5 from -0.8 when compared to March. We saw a large drop in employment, down to -6.8 from a positive 2.7 in March. New orders fell to -1.0 from a positive 0.5 in March.

Two readings are showing conflicting data for the coming month. Shipments rose to 9.1 in April, versus 3.5 in March, but inventories fell to -22.0, versus 0.0 in March. If shipments are up and inventories are down, what does that tell you about overall production?

After parsing through the report, other broad indicators were mixed as the indicators for new orders and employment were weaker for April. The Philly Fed showed that indicators of future activity suggest that firms are continuing to expect growth, but optimism waned compared with last month. Today’s news is on top of a weaker-than-expected report from the Labor Department’s reading on weekly jobless claims.

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