Philadelphia Area Manufacturing Stronger, Services Weaker

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Manufacturing activity in the Philadelphia area increased in August, but services activity declined according to the two recent surveys from the Federal Reserve Bank of Philadelphia. Its August Manufacturing Business Outlook Survey indicates expansion in regional manufacturing activity, with the top line general business activity index increasing to 47.4 in August from 41.4 in July and, notably, the employee count index rose to 27.9 from 10.0 in the previous month. Similarly, the forward-looking six-month expectations indexes rose significantly with the general business activity index increasing 39 points to 73.6, its highest level since August 1983. 

The story was entirely different in the services sector, with the Philly Fed’s Nonmanufacturing Business Outlook Survey registering m/m declines in almost all of its indexes in August. The top line general business activity index fell from a weak +7.4 in July to -10.6 in August. The employee count indexes were barely positive, and the average workweek index moved into negative territory at -13.4  from +10.8 in the prior month. The six-month expectations indexes were no better, with the regional index falling to -6.3 from +15.7, and the firm specific index declining to +12.4 from +41.9. 

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