The Philadelphia Fed Index, also known as Manufacturing Business Outlook Survey, is a monthly survey produced by the Federal Reserve Bank Philadelphia. The index tracks local manufacturing conditions in Third Federal Reserve District of the United States which covers Southern New Jersey, Delaware and Eastern Pennsylvania.
The Philadelphia Fed Index intends to provide an overview of current manufacturing conditions and short term forecast of manufacturing activities in the area. It is a monthly survey conducted by the Federal Reserve Bank of Philadelphia. Each month Federal Reserve Bank send voluntary questioners to local manufacturers in its region, the partakers are asked to specify the trend of change during the last month in overall business activity by reporting on several actions.
These measures include working hours, rate of employment, new orders, unfilled orders, inventories, shipments, prices and delivery times. The members are also requested to answer how they expect their business to change over the next six months. Some month they may have asked some other questions concentrated on the subject related to the current market situation.
The Federal Reserve Bank of Philadelphia compiles the result of these questioners into its manufacturing Philadelphia Fed Index; this report is commonly referred to as Federal Reserve Bank Manufacturing Business Outlook Survey.
Philadelphia Fed Index is considered a useful indicator of business and economic activity across the nation because the manufacturing sector is central to overall financial health in the region and across the country. The report generates a number in positive or negative; a number above zero indicates that manufacturing business is expanding while a figure below zero shows a company is contracting.
Philadelphia Fed Index is released on 3rd Thursday of every month by Federal Reserve Bank of Philadelphia. In June 2020, the index increases to 27.5 recovering from -43.1 in May 2020. It is the first positive number since February as current new orders and shipments recovered from contraction level. The shipments index rose to 56 points while new orders rose to 42 points. The employment index also increased to 11 points, but the firm sustained to report decreases in employment on balance. All impending indicators improved signifying that firms believe overall progress over the next six months.