The Philly Fed Business Outlook Survey shows regional activity weakened with current indicators negative. The Six-Month Outlook brightened in what I believe is rampant over-optimism.

“The current activity index has shown no pattern of sustained growth over the past seven months, generally alternating between positive and negative readings.”

Note the negative slope of current conditions and future expectations. Current conditions are in recession territory.

Philly Fed at a Glance

Business Outlook Survey May vs. April 6 Months From Now
Series Data Apr Index Increase No Change Decrease May Index Apr Index Increase No Change Decrease May Index
Business Conditions 1.3 23.8 41.8 29.0 -5.2 19.5 44.5 36.3 12.2 32.3
New Orders -1.0 27.4 35.5 35.3 -7.9 24.3 47.2 34.2 12.7 34.5
Shipments 9.1 23.9 39.3 32.4 -8.5 26.5 47.1 29.1 15.4 31.7
Unfilled Orders -8.7 12.6 60.5 21.9 -9.3 -2.1 24.4 61.7 7.5 16.9
Delivery Times -13.8 10.2 68.3 16.2 -6.0 -4.5 12.1 69.4 10.2 1.9
Inventories -22.2 25.3 52.2 21.1 4.1 -13.3 19.6 55.2 20.8 32.3
Prices Paid 3.1 18.1 69.2 11.2 6.9 26.6 36.8 51.9 6.0 30.7
Prices Received -7.5 7.0 81.3 10.3 -3.3 8.3 24.5 63.4 6.3 18.2
Number of Employees -6.8 13.7 63.9 22.4 -8.7 8.2 23.9 56.8 14.0 10.0
Average Workweek -2.1 14.7 54.7 27.2 -12.4 6.6 26.4 53.9 12.3 14.1
Capital Expenitures 7.8 25.4 52.4 13.9 11.5

Key May Index Numbers

  • Business Conditions: -5.2
  • New Orders: -7.9
  • Shipments: -8.5
  • Unfilled Orders: -9.3
  • Number of Employees: -8.7
  • Average Workweek: -12.4

Margin Squeeze

  • Price Paid +6.9
  • Prices Received  -3.3

Looking ahead,  future expectations rose from 19.5 to 32.3, yet businesses are not backing that optimism up with a huge jump capital expenditure plans or hiring plans although both showed small increases.
 
Mike “Mish” Shedlock