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Home > Newsroom > Press Releases > 2011 Releases > Firms See Weakened Business Activity

Firms See Weakened Business Activity

June 16, 2011

For immediate release
Contact: Katherine Dibling, Senior Media Representative, (215) 574-4119

Regional manufacturing activity weakened in June, according to the respondents to the Business Outlook Survey. The survey's indicators for activity and new orders turned negative this month, while indicators for shipments and employment fell but remained slightly positive. The diffusion index of current activity decreased to -7.7 from 3.9 in May. The broadest indicator of future activity fell sharply in June, recording its lowest reading in 31 months.

Firms' responses suggested little overall improvement in the labor market this month. The current employment index remained positive for the ninth consecutive month, but only 14 percent of the firms reported an increase in employment, while 10 percent reported a decline.

Special Questions: Costs, Price Increases, Surcharges

• Forty-seven percent of the firms indicated they had increased base prices since the beginning of the year, although 54 percent said they have been unable to pass on cost increases.
• Nineteen percent have instituted surcharges, and 14 percent have price escalation clauses covering cost increases.
• Respondents also indicated that a large percentage of their suppliers have instituted surcharges covering recent cost increases: 71 percent of the firms reported surcharges for transportation, 36 percent for commodities, and 36 percent for energy.
  

Price Pressures Show Moderation

• Indexes for prices paid and prices received declined from May and continue a trend of moderating price pressures in recent months.
• Thirty-seven percent reported higher prices for inputs this month. Ten percent reported a decline.
• Seventeen percent reported higher prices for their own goods this month. Twelve percent reported reported price reductions.

Firms See Little Overall Improvement in the Labor Market

• Only fourteen percent of the firms reported an increase in employment, while 10 percent reported a decline.
• Only slightly more firms reported a longer workweek (14 percent) than reported a shorter one (12 percent) and the workweek index was down only slightly from May.

This survey, which was started in 1968, gathers information on the manufacturing industry in the Third Federal Reserve District covering eastern Pennsylvania, southern New Jersey, and Delaware. The survey asks about the current pace of business in the participants' plants and their future expectations of business.

To arrange an interview, contact Katherine Dibling, the Bank's senior media representative, at (215) 574-4119. The next Business Outlook Survey will be released at 10 a.m., Thursday, July 21, 2011, and will be made available on our website and over Businesswire. The aggregate historical data series is also available on the Bank’s website.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.