As typical, there is not much to cheer about in the latest Philadelphia Fed Manufacturing Survey.

The index is hovering above zero where it has been for months. That’s about as good as it gets.

April vs. March

New orders are weak while shipments dipped into contraction. Prices paid is negative for the second month and prices received has been in contraction for four months.

The number of employees is positive, but that will not last long unless orders pick up. Strength in the US dollar suggests orders, especially export orders, won’t pick up.

That said, a special survey question this month shows exports only account for 10 percent of revenue. Thus, weakness in orders is also local.

Special Question on Exports

Approximately what percentage of your total revenues come from exports and what percentage of total nonlabor costs are paid to foreign suppliers?

Expectations Six Months From Now

Why the Optimism?

As is typically the case, firms were optimistic in their forecast six months ahead.

The first chart shows expectations are generally overly optimistic and essentially useless. Expectations rise and fall with current report and are typically higher.

Optimism in the face of mediocre to downright poor economic reports is quite interesting. Does the Fed have everyone believing the economy will  pick up?

Mike “Mish” Shedlock