Philly Manufacturing Expands Again as Shipments Surge and Jobs Turn Positive
In March, Philadelphia’s regional manufacturing activity expanded for the third consecutive month, with the index for general business activity advancing from 16.3 to 18.1. This month, 39.2% of firms reported increases in activity, while 21.1% of firms noted decreases. The index for new orders moved down from 11.7 to 8.6, while the shipments index surged 21.9 points to 22.2, its highest reading since January 2025. Meanwhile, the employment and average employee workweek indexes both turned positive, rising 2.1 points to 0.8 and 14.4 points to 2.8, respectively.
The prices paid index increased from 38.9 to 44.7, while the prices received index moved up from 16.7 to 21.2 in March. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.
Looking ahead, indicators showing expectations for future growth remained positive. After climbing 17.3 points in February, expectations for future business activity fell 2.8 points to 40.0 in March. The decline came from an increase in the proportion of firms expecting a decrease in activity (16.3%). At the same time, the proportion of firms expecting an increase in activity (56.3%) moved up in March. The future new orders index decreased from 54.1 to 49.6, while the capital expenditures index rose from 14.4 to 25.8. The future prices paid and prices received indexes declined from 54.1 to 53.7 and from 50.1 to 38.4, respectively. Additionally, the index for future employment jumped from 14.9 to 40.4.
In March, firms were asked about total production and capacity utilization in the first quarter of 2026 compared to the prior quarter. Of those responses, 51.8% reported an increase in production, while a smaller share (29.6%) noted a decrease. The median capacity utilization rate was unchanged from last quarter at 70% to 80%. When asked about which factors acted as constraints on capacity utilization, nearly half of firms (48.1%) said that uncertainty was at least a moderate constraint on capacity utilization. Looking forward, 53.6% of respondents expect the impact of energy markets to worsen, while 40.7% forecast the impact from uncertainty to worsen.