Philly Fed Disappointing; Hints of Nothingness

by Mike ‘Mish’ Shedlock
Mish Talk

The Philadelphia Fed manufacturing report came in at -2.9% vs. a Bloomberg Econoday consensus of 5.0. Supposedly this shows “hints of life for a factory sector”.


The Philly Fed is a widely read report for leading indications on the manufacturing sector but maybe they should consider offering a composite headline index as well as the general business conditions index. The latter, based not on a composite of components but the answer to a single subjective question, came in at minus 2.9 for July in contrast, for a second month in a row, to readings in the body of the report.

New orders jumped to 11.8 from two months of prior contraction in improvement confirmed by backlog orders which surged from minus 12.6 to plus 1.9 for the first positive reading in a year. Strength in orders is the key and it points to higher shipments and employment ahead. And shipments this month are already active, at plus 6.3 for the first positive reading since March. Employment, however, remains weak, at minus 1.6 with the workweek also still soft, at minus 3.6 which however is an improvement from recent readings. Price data are soft with inputs showing less pressure and selling prices dead flat.

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