July 2020

Note: Survey responses were collected from July 6 to July 13.

Manufacturing activity in the region continued to expand this month, according
to firms responding to the July Manufacturing Business Outlook Survey. The
survey's current indicators for general activity, new orders, and shipments
showed positive readings for the second consecutive month, coinciding with the
phased reopening of the economy in our region. The employment index reached
positive territory for the first time since March. Although future indicators
for general activity, new orders, and shipments declined from last month's
readings, the indexes remained elevated, suggesting that the firms expect
overall growth over the next six months.

Most Current Indicators Are Positive

The diffusion index for current activity edged down 3 points to 24.1 in July,
its second consecutive positive reading after reaching long-term lows in the
spring. The percentage of firms reporting increases (45 percent)
this month exceeded the percentage reporting decreases (21 percent). The index
for new orders rose from 16.7 to 23.0. Nearly 47 percent of the firms reported
increases this month, while 24 percent reported decreases. The current shipments
index fell 10 points to 15.3 in July. Unfilled orders rose 4 points to 3.9,
while delivery times fell 7 points to -6.4, suggesting shorter delivery times.

The firms reported increases in manufacturing employment overall for the first
time since March, as the current employment index rose 24 points to 20.1 this
month, its highest reading since October. More than 29 percent of the firms
reported increases (up from 12 percent last month), while 9 percent reported
decreases (down from 16 percent). The average workweek index rose 24 points to
17.2, also reaching its first positive reading since March.

Firms Report Overall Increases in Prices

The prices paid diffusion index increased 5 points to 15.7. Nearly 16 percent of
the firms reported increases in input prices, and none reported decreases; most
firms (84 percent) reported no change. The current prices received index, reflecting 
manufacturers' own prices, held steady at 11.5.

All Future Indicators Remain Positive

The respondents remained optimistic about growth over the next six months. The
diffusion index for future general activity fell 30 points to 36.0 in July.
Roughly half of the firms reported increases this month (down from 75 percent
last month), while 13 percent reported decreases (up from 9 percent). The future
new orders index fell 12 points to 55.6, while the future shipments index
decreased 14 points to 51.3 this month. The future inventories index rose
6 points to a reading of 8.9.

The firms' expectations for future prices remained positive this month: The
future prices paid index edged down 1 point to 43.0, and the future prices
received index fell 4 points to 24.7.

The firms continued to expect increases in employment over the next six months,
with the future employment index edging up 3 points. Nearly 37 percent of the
firms expected higher employment, while 4 percent expected lower employment. The
firms' expectations for future capital spending held steady this month.

Summary

Responses to the July Manufacturing Business Outlook Survey indicated continued
improvement in manufacturing activity. The indicators for current activity, new
orders, and shipments remained positive for the second consecutive month, and
the employment index reached positive territory for the first time since March.
Both prices paid and prices received indexes remained positive. The survey's
future indexes suggest that respondents continue to expect growth in
manufacturing activity over the next six months.


July 2020

                       July vs. June                 Six Months from Now
                                                     vs. July

                 Prev.                         Prev.
                 Diff.  Inc. No ch. Dec. Diff. Diff.  Inc. No ch. Dec. Diff.
                 Index                   Index Index                   Index

General Business   27.5  45.1  29.4  21.1  24.1  66.3  48.5  22.6  12.5  36.0
Conditions

New Orders         16.7  46.7  29.4  23.7  23.0  67.9  66.0  19.2  10.4  55.6

Shipments          25.3  38.2  38.7  22.9  15.3  65.0  64.5  16.2  13.1  51.3

Unfilled Orders    -0.1  16.9  68.9  12.9   3.9  31.5  28.3  58.9   6.4  22.0

Delivery Times      0.4   9.7  72.4  16.0  -6.4  18.5  25.6  55.0  15.1  10.5

Inventories         0.0  10.6  64.7  22.4 -11.8   2.9  28.5  49.3  19.6   8.9

Prices Paid        11.1  15.7  84.3   0.0  15.7  44.3  45.6  47.4   2.6  43.0

Prices Received    11.0  14.4  82.8   2.9  11.5  28.9  31.2  58.2   6.4  24.7

Number of Emp.     -4.3  29.2  61.6   9.1  20.1  29.6  36.8  55.1   4.3  32.4

Avg. Emp. Wrkwk.   -6.5  26.3  64.4   9.2  17.2  25.9  32.5  55.6   5.3  27.3

Capital Ex.        --    --    --    --    --    26.3  33.0  58.1   6.4  26.6


Notes: (1) Diffusion indexes represent the percentage of respondents indicating
           an increase minus the percentage indicating a decrease.
       (2) All data are seasonally adjusted.
       (3) Percentages may not sum to 100 percent because of rounding,
           omission by respondents, or both.
       (4) Survey results reflect data received through July 13, 2020.

Federal Reserve Bank of Philadelphia
Manufacturing Business Outlook Survey
Released: July 16, 2020, at 8:30 a.m. ET.