Input Stories

In November, Philadelphia’s regional manufacturing activity continued to decline but at a slower pace than in October. The index for current general business activity stepped up from -12.8 to -1.7 in November. This month, 31.0% of firms reported decreases in activity, while a smaller 29.2% of firms noted increases. The index for new orders declined to its worse reading since April, falling from 18.2 to -8.6, and the index for shipments decreased from 6.0 to -8.7. Meanwhile, the employment index ticked up 1.4 points to 6.0 as the average employee workweek dropped 9.1 points to 3.7.

The prices paid index increased from 49.2 to 56.1, while the prices received index fell in November from 26.8 to 17.7. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating manufacturers have been absorbing a portion of higher costs paid.

Looking ahead, indicators showing expectations for future growth continued to improve from previous months. After moving up 4.7 points in October, expectations for future business activity surged 13.4 points to 49.6, its highest reading in a year. The index saw both a jump in the firms expecting an increase in activity (47.4% to 54.3%) and a drop in the firms expecting a decrease in activity (11.2% to 4.7%). The future new orders index also moved up from 49.8 to 55.6, while the future shipments index stayed the same from October at 48.4. The capital expenditures index inched up from 25.2 to 26.7. Meanwhile, the future prices paid and prices received indexes both jumped, from 59.8 to 75.1 and 45.7 to 56.8, respectively. Additionally, the index for future employment moved up from 21.4 to 35.7.

In November, firms were asked special questions about price sensitivity and anticipated cost changes. Of those responses, 40.0% of firms indicated their customers have become more sensitive to prices since last quarter, and 60.7% anticipate rising industry costs in the next six months. Of those anticipating rising costs, 68.8% think competitors will respond by raising their prices, with the median response for when the prices will be raised being three months.