Philadelphia Fed Index

The Philadelphia Fed Index, also known as the Philadelphia Manufacturing Business Outlook Survey or PMI, is a monthly survey conducted by the Federal Reserve Bank of Philadelphia to gauge the health and activity of the manufacturing sector in the Third Federal Reserve District, which covers eastern Pennsylvania, southern New Jersey, and Delaware.

The survey collects data from around 100 manufacturing firms in the region and asks them about various aspects of their business, including new orders, shipments, employment, inventories, and prices. The survey also includes questions about future expectations for these indicators.

The responses to the survey questions are then used to calculate diffusion indexes, which are indicators of the overall sentiment and direction of the manufacturing sector. The diffusion indexes are calculated by taking the percentage of firms reporting an increase in a particular indicator and subtracting the percentage of firms reporting a decrease. A reading above zero indicates expansion, while a reading below zero suggests contraction.

The Philadelphia Fed Index is widely regarded as an important leading indicator of economic activity and is closely watched by economists, policymakers, and market participants. It provides insights into the current and future state of the manufacturing sector, which is a key component of overall economic growth.

In addition to the headline index, the Philadelphia Fed survey also provides sub-indexes for specific components of the manufacturing sector, such as new orders, shipments, employment, and prices. These sub-indexes can give a more detailed picture of the underlying factors driving the overall index.

The Philadelphia Fed Index is often compared to other regional manufacturing surveys, such as the Empire State Manufacturing Index and the ISM Manufacturing Index, to get a broader perspective on the health of the manufacturing sector across different regions of the United States.

Overall, the Philadelphia Fed Index is a valuable tool for monitoring and analyzing the performance of the manufacturing sector in the Third Federal Reserve District. It provides timely and reliable information that can help policymakers, businesses, and investors make informed decisions about economic conditions and trends.