Philadelphia Fed manufacturing index for January 44.3 versus -5.2 estimate

• Prior month -16.4
• Manufacturing index for the month of December 44.3 vs -5.2 estimate. The highest level since April 2021

Details:

• The diffusion index for current general activity rose from -10.9 in December to 44.3 in January, the highest since April 2021, marking the largest monthly increase since June 2020.
• 51% of firms reported increased activity (up from 19%), while 7% reported decreases (down from 30%); 41% reported no change (down from 45%).
• The new orders index jumped 47 points to 42.9, the highest since November 2021.
• The shipments index rose 39 points to 41.0, the highest since October 2020.
• The employment index increased 7 points to 11.9, with 13% of firms reporting increases, 1% reporting decreases, and 87% reporting no change.
• The average workweek index turned positive, rising to 20.3 from -3.7, its highest since March 2022.

Pirices rise:

• Firms reported overall increases in prices, with both price indexes reaching recent highs.
• The prices paid index rose 5 points to 31.9, the highest since December 2022.
  • 36% of firms reported increases in input prices, 4% reported decreases, and 60% reported no change.
• The prices received index jumped 24 points to 29.7, the highest since January 2023.
  • 35% of firms reported increases in their goods’ prices (up from 9%), 5% reported decreases, and 60% reported no change (down from 85%).

Looking ahead 6 months

• The diffusion index for future general activity rose from 33.8 in December to 46.3 in January.
  • 54% of firms expect increased activity, 7% expect decreases, and 36% expect no change.
• The future new orders index increased 5 points to 57.3.
• The future shipments index rose 11 points to 60.2, the highest since July 2021.
• The future employment index increased 8 points to 40.4, the highest since December 2021.
• The future prices paid index rose 9 points to 67.3, the highest since January 2022.
• The future prices received index edged down 1 point to 53.6.
• The future capital expenditures index increased 17 points to 39.0, the highest since July 2021.

Below is the summary of the data:

The election results may have skewed the data to the upside. It is a large one with rise, but next month it could easily go back down. Of concern is prices paid rose to 31.9 from 26.6 and prices received rose to 29.7 from 5.6. New orders jumped and may be impacted by expected tariffs. The index rose to 42.9 from -3.6 last month. Shipments also were up markedly to 41.0 from 1.7

This article was written by Greg Michalowski at www.forexlive.com.