December 2023 Note: Survey responses were collected from December 11 to December 18. Manufacturing activity in the region continued to decline overall, according to the firms responding to the December Manufacturing Business Outlook Survey. The survey’s indicators for general activity and shipments remained negative. Furthermore, the index for new orders declined sharply and turned negative. The employment index dipped into negative territory but continues to suggest mostly steady levels of employment overall. The price indexes neared their long-run averages. Most future activity indicators rose, suggesting more widespread expectations for overall growth over the next six months. Current Indicators Remain Weak The diffusion index for current general activity declined from -5.9 in November to -10.5 in December. This is the index’s 17th negative reading in the past 19 months. Almost 26 percent of the firms reported decreases (up from 18 percent last month), exceeding the 15 percent reporting increases (up from 12 percent); 56 percent of the firms reported no change in current activity (down from 70 percent last month). The new orders index dropped sharply from 1.3 to -25.6 in December. The shipments index rose 7 points from last month but remained negative at -10.8. On balance, the firms continued to report mostly steady levels of employment. The employment index declined 3 points to -1.7 in December. Similar shares of the firms reported decreases (15 percent) and increases (14 percent) in employment; most firms (71 percent) reported steady employment levels. The average workweek index remained negative but rose 6 points to -5.0. Price Indexes Are Near Long-Run Averages On balance, the firms reported overall increases in prices. However, most firms reported no change in prices, and both price indexes neared their long-run averages. The prices paid index rose 10 points to 25.1 in December. More than 33 percent of the firms reported increases in input prices, while 8 percent reported decreases; 57 percent reported no change. The current prices received index edged down 1 point to 13.6. More than 23 percent of the firms reported increases in the prices of their own goods, 10 percent reported decreases, and 67 percent reported no change. Firms Report Lower Production, Little Change in Capacity Utilization In this month’s special questions, the firms were asked to estimate their total production growth for the fourth quarter ending this month compared with the third quarter of 2023 (see Special Questions). A higher share of firms reported a decrease in production (44 percent) compared with the share reporting an increase (21 percent). Regarding firms’ capacity utilization rate for the current quarter and one year ago, the median current capacity utilization rate reported among the responding firms was unchanged at 70 to 80 percent. Most firms reported labor supply as at least a slight constraint to capacity utilization in the current quarter, although the share reporting it as a moderate or significant constraint (35 percent) declined from when this question was asked in September (49 percent). Half of the firms reported supply chains were not at all a constraint in the current quarter, up from 46 percent from the previous quarter. Looking ahead over the next three months, most firms expect the impacts of various factors to stay the same. However, the share of firms expecting the impacts to stay the same or improve was higher across all factors compared with when this question was asked in September. Future Indicators Rise but Remain Below Long-Run Averages The diffusion index for future general activity rose from a reading of -2.1 in November to 12.1 in December, its highest reading since July. Nearly 39 percent of the firms expect an increase in activity over the next six months, exceeding the 27 percent that expect a decrease; 28 percent expect no change. The future new orders index increased 9 points to 20.2, and the future shipments index rose 6 points to 21.5. On balance, the firms expect mostly steady employment over the next six months, and the future employment index declined from a reading of 4.3 to 1.4. The future prices received index ticked down for the second consecutive month, and the future prices paid index dropped 18 points to 19.9, falling below its long-run average. The index for future capital expenditures fell 6 points to -7.5. Summary Responses to the December Manufacturing Business Outlook Survey suggest overall declines in the region’s manufacturing sector. The indicators for current activity, new orders, and shipments were all negative. On balance, the firms continued to indicate overall increases in prices and mostly steady employment. The survey’s broad indicators for future activity improved, suggesting more widespread expectations for growth over the next six months. Special Questions (December 2023) 1. How will your firm’s total production for the fourth quarter of 2023 compare with that of the third quarter of 2023? % of firms An increase of: 10% or more 5.9 5-10% 14.7 0-5% 0.0 Subtotal 20.6 No change 35.3 A decline of: 0-5% 5.9 5-10% 23.5 10% or more 14.7 Subtotal 44.1 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2023:Q4) and one year ago (2022:Q4)? 2023:Q4 2022:Q4 Capacity Utilization Rate % of reporters % of reporters Less than 30% 0.0 0.0 30-40% 8.6 2.9 40-50% 2.9 2.9 50-60% 2.9 2.9 60-70% 22.9 17.1 70-80% 25.7 34.3 80-90% 31.4 28.6 90-100% 5.7 11.4 Median Utilization Rate 70-80 70-80 3. In the current quarter, to what degree have the following factors acted as constraints on capacity utilization? Not at all Slightly Moderately Significantly (%) (%) (%) (%) COVID-19 mitigation measures 100.0 0.0 0.0 0.0 Energy markets 81.8 18.2 0.0 0.0 Financial capital 78.8 12.1 9.1 0.0 Labor supply 34.3 31.4 17.1 17.1 Supply chains 50.0 38.2 5.9 5.9 Other factors 80.0 0.0 5.0 15.0 4. Over the next three months, how do you expect the impacts of the following factors as constraints on capacity utilization to change? Worsen Stay the same Improve (%) (%) (%) COVID-19 mitigation measures 12.1 87.9 0.0 Energy markets 3.0 93.9 3.0 Financial capital 5.9 85.3 8.8 Labor supply 5.7 74.3 20.0 Supply chains 0.0 73.5 26.5 Other factors 4.5 90.9 4.5 Summary of Returns December 2023 December vs. November Six Months from Now vs. December Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -5.9 15.4 56.2 25.9 -10.5 -2.1 38.8 27.6 26.7 12.1 Conditions New Orders 1.3 15.8 39.0 41.4 -25.6 11.3 47.1 20.6 26.9 20.2 Shipments -17.9 22.3 44.3 33.1 -10.8 16.3 44.3 30.0 22.8 21.5 Unfilled Orders -9.8 12.7 66.7 20.6 -7.9 -7.8 22.8 57.6 16.7 6.0 Delivery Times -8.7 2.8 76.2 19.6 -16.8 -22.4 8.3 71.4 18.0 -9.7 Inventories -3.1 19.5 54.2 23.7 -4.2 0.1 22.0 52.6 18.1 3.9 Prices Paid 14.8 33.1 57.0 8.0 25.1 37.9 36.3 45.5 16.4 19.9 Prices Received 14.8 23.1 67.3 9.5 13.6 34.5 42.3 42.7 13.7 28.6 Number of Emp. 0.8 13.5 71.2 15.3 -1.7 4.3 12.7 72.8 11.3 1.4 Avg. Emp. Wrkwk. -11.4 5.1 84.7 10.1 -5.0 -0.1 10.2 73.7 12.5 -2.3 Capital Ex. -- -- -- -- -- -1.3 15.2 57.4 22.7 -7.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through December 18, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: December 21, 2023, at 8:30 a.m. ET. November 2023 Note: Survey responses were collected from November 6 to November 13. Manufacturing activity in the region continued to decline overall, according to the firms responding to the November Manufacturing Business Outlook Survey. The survey’s indicator for general activity rose but remained negative. The indicator for shipments turned negative, while the indicator for new orders was positive but low. The employment index suggests steady employment overall, and both price indexes indicate overall increases in prices. The future indicators suggest that firms’ expectations for growth over the next six months remain subdued. Current Indicators Remain Weak The diffusion index for current general activity increased 3 points but remained negative at -5.9 this month. This is the index’s 16th negative reading in the past 18 months. Almost 18 percent of the firms reported decreases in general activity this month (down from 35 percent last month), while 12 percent reported increases (down from 26 percent); 70 percent reported no change (up from 38 percent last month). The index for new orders declined 3 points to 1.3, while the current shipments index more than offset its increase last month, dropping sharply from 10.8 to -17.9. On balance, the firms reported mostly steady levels of employment. The employment index declined 3 points to 0.8 in November. Similar shares of the firms reported increases (16 percent) and decreases (15 percent) in employment; most firms (68 percent) reported steady employment levels. The average workweek index remained negative, falling 7 points to -11.4. Firms Continue to Report Price Increases Overall The prices paid diffusion index declined from 23.1 in October to 14.8 in November. Almost 21 percent of the firms reported increases in input prices, exceeding the 6 percent reporting decreases; 72 percent of the firms reported no change in prices paid. The current prices received index was little changed at 14.8. Twenty-one percent of the firms reported increases in prices received for their own goods this month, 6 percent reported decreases, and 72 percent reported no change. Firms Expect Lower Increases in Own Prices In this month’s special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 3.0 percent, down from 4.0 percent when this question was last asked in August. The firms reported a median increase of 5.0 percent in their own prices over the past year, unchanged from last quarter. The firms’ median forecast for the rate of inflation for U.S. consumers over the next year was 4.0 percent, unchanged from August. Over the long run, the firms’ median forecast for the 10-year average inflation rate was 3.0 percent, down from 3.5 percent. Future Indicators Soften The diffusion index for future general activity fell from 9.2 in October to -2.1 in November, its first negative reading since May. The share of firms expecting decreases in activity over the next six months (30 percent) narrowly exceeded the share expecting increases (28 percent); 38 percent expect no change. The future new orders index decreased 8 points to 11.3, while the future shipments index increased 11 points to 16.3. The firms continued to expect overall increases in employment over the next six months, but the future employment index declined 4 points to 4.3. The future capital expenditures index rose but remained negative at -1.3. Summary Responses to the November Manufacturing Business Outlook Survey suggest a decline in overall regional manufacturing activity this month. The indicator for current activity rose but remained negative, while the shipments index turned negative, and the new orders index remained positive but low. On balance, the firms indicated mostly steady employment, and the current price indexes continue to suggest increases in prices. The survey’s broad indicators for future activity suggest respondents’ expectations for growth over the next six months were subdued. Special Question (November 2023) Please list the annual percent change with respect to the following: Current Previous (Aug. 2023) For your firm: Forecast for next year (2023Q4-2024Q4) 1. Prices your firm will receive (for its own goods and services sold). 3.0 4.0 2. Compensation your firm will pay per employee (for wages and benefits). 4.0 4.0 Last year's price change (2022Q4-2023Q4) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 5.0 5.0 For U.S. consumers: 4. Prices U.S. consumers will pay for goods and services over the next year. 4.0 4.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2023-2032). 3.0 3.5 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns November 2023 November vs. October Six Months from Now vs. November Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -9.0 11.9 70.3 17.8 -5.9 9.2 27.5 37.5 29.6 -2.1 Conditions New Orders 4.4 20.4 59.6 19.1 1.3 18.9 37.1 30.8 25.8 11.3 Shipments 10.8 7.8 63.4 25.7 -17.9 5.4 40.9 29.6 24.6 16.3 Unfilled Orders -16.8 13.7 62.9 23.5 -9.8 -7.6 16.5 54.1 24.3 -7.8 Delivery Times -21.4 15.2 59.8 24.0 -8.7 -17.1 2.2 68.0 24.7 -22.4 Inventories -7.0 13.1 67.7 16.3 -3.1 4.9 13.7 66.2 13.6 0.1 Prices Paid 23.1 20.5 72.2 5.7 14.8 48.5 44.4 45.8 6.5 37.9 Prices Received 14.6 21.0 71.6 6.2 14.8 46.9 46.3 41.6 11.8 34.5 Number of Emp. 4.0 16.3 67.5 15.4 0.8 7.8 19.3 61.4 15.0 4.3 Avg. Emp. Wrkwk. -4.3 8.9 70.3 20.3 -11.4 -1.4 11.4 72.2 11.6 -0.1 Capital Ex. -- -- -- -- -- -4.8 20.2 58.4 21.4 -1.3 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through November 13, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: November 16, 2023, at 8:30 a.m. ET. October 2023 Note: Survey responses were collected from October 9 to October 17. Manufacturing activity in the region was mixed this month, according to the firms responding to the October Manufacturing Business Outlook Survey. The survey’s indicator for general activity remained negative, while the indicators for new orders and shipments were positive but low. The employment index turned positive, and both price indexes indicate overall increases in prices. The firms continue to expect growth overall over the next six months, but most future indicators declined. Current Indicators Are Mixed The diffusion index for current general activity increased 5 points but remained negative at -9.0 this month. This is the index’s 15th negative reading in the past 17 months. Almost 35 percent of the firms reported decreases in general activity this month, while 26 percent reported increases; 38 percent reported no change. The index for new orders rose 15 points to 4.4, and the current shipments index rose from -3.2 to 10.8. On balance, the firms reported increases in employment. The employment index rose from -5.7 last month to 4.0 this month, its first positive reading since February. More than 17 percent of the firms reported increases in employment, slightly exceeding the 13 percent that reported decreases; most firms (70 percent) reported steady employment levels. The average workweek index turned negative, falling 9 points to -4.3. Firms Continue to Report Price Increases Overall The indicators for prices paid and prices received were little changed from last month and remained near long-run averages. The prices paid index edged down from 25.7 to 23.1. The percentage of firms reporting increases in input prices (29 percent) exceeded the percentage reporting decreases (6 percent); 65 percent of the firms reported no change. The current prices received index was mostly unchanged at 14.6. More than 21 percent of the firms reported increases in prices received for their own goods this month, 7 percent reported decreases, and 70 percent reported no change. Firms Anticipate Lower Capital Expenditures Next Year For this month's special question, manufacturers were asked about their plans for different categories of capital expenditures next year (see Special Question). A slightly larger share of firms expects to decrease total capital spending rather than increase total spending (30 percent versus 24 percent); 46 percent expect total spending to stay the same. When this question was asked last year, 37 percent of the firms expected to increase total spending, compared with 24 percent that expected to decrease spending. On balance, the firms expect lower capital expenditures next year for energy-saving investments, structure, and other, and they expect higher capital expenditures for software and computer and related hardware. Future Indicators Decline The diffusion index for future general activity edged down from 11.1 to 9.2. The share of firms expecting increases in activity over the next six months (36 percent) exceeded the share expecting decreases (27 percent); more than 31 percent expect no change. The future new orders index decreased 7 points to 18.9, while the future shipments index dropped 25 points to 5.4, its lowest reading since May. The firms continued to expect overall increases in employment over the next six months, and the future employment index ticked up 1 point to 7.8. The future capital expenditures index fell from 7.5 to -4.8, offsetting its increase from last month. Summary Responses to the October Manufacturing Business Outlook Survey suggest mixed regional manufacturing conditions this month. The indicator for current activity remained negative, while the new orders and shipments indexes were positive. The firms indicated mostly steady employment, and the current price indexes continue to suggest increases in prices on balance. The survey’s broad indicators for future activity declined but continued to suggest respondents expect growth over the next six months. Special Question (October 2023) Comparing 2024 with 2023, do you expect capital expenditures to be higher, the same, or lower for each of the following categories? Higher Same Lower Diffusion --------(% of reporters)------- Index Software 35.1 45.9 18.9 16.2 Noncomputer equipment 24.3 51.4 24.3 0.0 Energy-saving investments 13.9 67.6 16.7 -2.8 Computer and related hardware 18.9 64.9 16.2 2.7 Structure 16.2 51.4 32.4 -16.2 Other 4.2 75.0 20.8 -16.7 Total capital spending 24.3 45.9 29.7 -5.4 Summary of Returns October 2023 October vs. September Six Months from Now vs. October Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -13.5 25.5 38.0 34.5 -9.0 11.1 36.4 31.1 27.2 9.2 Conditions New Orders -10.2 34.4 35.5 30.0 4.4 25.6 40.9 33.2 22.1 18.9 Shipments -3.2 30.4 50.1 19.5 10.8 30.5 35.7 32.0 30.3 5.4 Unfilled Orders -13.6 17.7 47.8 34.5 -16.8 -5.6 19.2 54.0 26.8 -7.6 Delivery Times -14.9 9.3 60.0 30.7 -21.4 -9.5 10.9 58.2 28.0 -17.1 Inventories 8.9 11.2 67.4 18.3 -7.0 -3.4 20.9 59.2 16.0 4.9 Prices Paid 25.7 29.1 64.9 6.0 23.1 48.0 48.5 51.5 0.0 48.5 Prices Received 14.8 21.2 70.1 6.6 14.6 36.5 51.3 43.6 4.4 46.9 Number of Emp. -5.7 17.1 69.8 13.1 4.0 6.5 22.1 61.5 14.3 7.8 Avg. Emp. Wrkwk. 4.7 14.4 66.2 18.7 -4.3 -1.3 12.5 72.3 14.0 -1.4 Capital Ex. -- -- -- -- -- 7.5 13.1 69.0 17.9 -4.8 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through October 17, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: October 19, 2023, at 8:30 a.m. ET. September 2023 Note: Survey responses were collected from September 11 to September 18. Manufacturing activity in the region declined overall, according to the firms responding to the September Manufacturing Business Outlook Survey. The survey’s indicators for general activity, new orders, and shipments returned to negative territory after turning positive in August. On balance, the firms continued to report a decline in employment. The price indexes remained near long-run averages. Most future activity indicators improved, suggesting more widespread expectations for overall growth over the next six months. Key Current Indicators Turn Negative The diffusion index for current general activity returned to negative territory, falling from 12.0 in August to -13.5 in September. This is the index’s 14th negative reading in the past 16 months. More than 29 percent of the firms reported decreases (up from 13 percent last month), exceeding the 16 percent reporting increases (down from 25 percent); 55 percent of the firms reported no change in current activity (down from 58 percent last month). The indicators for new orders and shipments also declined. The new orders index – which had been negative for 14 consecutive months prior to August – dropped from 16.0 last month to -10.2 this month. The shipments index declined 9 points to -3.2 in September. On balance, the firms continued to report a decline in employment, with the index little changed at -5.7. Over 19 percent of the firms reported a decrease in employment, compared with 14 percent that reported an increase; most firms (67 percent) reported no change. The average workweek index edged down from 6.3 to 4.7. Price Indexes Remain Near Long-Run Averages On balance, the firms reported overall increases in prices. However, most firms reported no change in prices, and both price indexes remained near their long-run averages. The prices paid diffusion index rose 5 points to 25.7 in September. More than 26 percent of the firms reported increases in input prices, while less than 1 percent reported decreases; 73 percent reported no change. The current prices received index was little changed at 14.8 in September. Nearly 25 percent of the firms reported increases in the prices of their own goods, 10 percent reported decreases, and 65 percent reported no change. Firms Report Little Change in Production and Capacity Utilization In this month’s special questions, the firms were asked to estimate their total production growth for the third quarter ending this month compared with the second quarter of 2023 (see Special Questions). The share of firms reporting an increase in production was the same as the share reporting a decrease (37 percent). Regarding firms’ capacity utilization rate for the current quarter and one year ago, the median current capacity utilization rate reported among the responding firms was unchanged at 70 to 80 percent. Although a plurality of firms reported labor supply as a slight or moderate constraint to capacity utilization, 34 percent indicated labor was not at all a constraint; one-fifth of the firms reported labor was a significant constraint. Nearly 46 percent of the firms reported supply chains were not a constraint to capacity utilization, up from 27 percent when this question was asked in June. Looking ahead over the next three months, most firms expect the impacts of various factors to stay the same. However, 22 percent of the firms expect the impacts of COVID-19 mitigation measures to worsen, up from zero percent in June. Additionally, 24 percent of the firms expect the impacts of energy markets to worsen, while over one-fifth of the firms expect the impacts of financial capital to worsen. Future Indicators Rise The diffusion index for future general activity rose from a reading of 3.9 in August to 11.1 in September. Nearly 30 percent of the firms expect an increase in activity over the next six months, exceeding the 19 percent that expect a decrease; 45 percent expect no change. The future new orders and future shipments indexes rose to near their long-run averages. The future new orders index increased 7 points to 25.6, and the future shipments index rose 16 points to 30.5. On balance, the firms continued to expect increases in employment over the next six months, but the future employment index declined from a reading of 12.0 to 6.5. Both future price indexes declined but remained somewhat above their long-run averages. The future capital expenditures index rose 12 points to 7.5. Summary Responses to the September Manufacturing Business Outlook Survey suggest overall declines in the region’s manufacturing sector. The indicators for current activity, new orders, and shipments all declined into negative territory. The firms continued to report overall increases in prices and an overall decline in employment. The survey’s future indexes improved, suggesting more widespread expectations for growth over the next six months. Special Questions (September 2023) 1. How will your firm’s total production for the third quarter of 2023 compare with that of the second quarter of 2023? % of firms An increase of: 10% or more 20.0 5-10% 8.6 0-5% 8.6 Subtotal 37.2 No change 25.7 A decline of: 0-5% 17.1 5-10% 11.4 10% or more 8.6 Subtotal 37.1 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2023:Q3) and one year ago (2022:Q3)? 2023:Q3 2022:Q3 Capacity Utilization Rate % of reporters % of reporters Less than 30% 0.0 0.0 30-40% 5.7 2.9 40-50% 5.7 2.9 50-60% 0.0 2.9 60-70% 28.6 20.0 70-80% 40.0 31.4 80-90% 14.3 22.9 90-100% 5.7 17.1 Median Utilization Rate 70-80 70-80 3. In the current quarter, to what degree have the following factors acted as constraints on capacity utilization? Not at all Slightly Moderately Significantly (%) (%) (%) (%) COVID-19 mitigation measures 100.0 0.0 0.0 0.0 Energy markets 85.3 5.9 8.8 0.0 Financial capital 82.4 2.9 11.8 2.9 Labor supply 34.3 17.1 28.6 20.0 Supply chains 45.7 17.1 22.9 14.3 Other factors 75.0 4.2 8.3 12.5 4. Over the next three months, how do you expect the impacts of the following factors as constraints on capacity utilization to change? Worsen Stay the same Improve (%) (%) (%) COVID-19 mitigation measures 21.9 75.0 3.1 Energy markets 24.2 75.8 0.0 Financial capital 21.2 78.8 0.0 Labor supply 14.3 74.3 11.4 Supply chains 5.7 77.1 17.1 Other factors 15.4 84.6 0.0 Summary of Returns September 2023 September vs. August Six Months from Now vs. September Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 12.0 15.9 54.8 29.3 -13.5 3.9 29.8 44.5 18.7 11.1 Conditions New Orders 16.0 19.1 51.6 29.3 -10.2 18.2 44.4 36.8 18.8 25.6 Shipments 5.7 20.3 56.3 23.5 -3.2 14.9 50.4 29.7 19.9 30.5 Unfilled Orders -4.8 11.9 60.6 25.5 -13.6 3.8 16.5 61.4 22.1 -5.6 Delivery Times -7.0 9.5 64.9 24.4 -14.9 -11.3 11.9 66.7 21.4 -9.5 Inventories -10.2 26.6 53.6 17.7 8.9 -7.3 15.7 65.2 19.1 -3.4 Prices Paid 20.8 26.2 73.3 0.5 25.7 53.0 49.1 49.0 1.1 48.0 Prices Received 14.1 24.7 65.3 9.9 14.8 40.6 39.6 53.5 3.1 36.5 Number of Emp. -6.0 13.5 67.3 19.2 -5.7 12.0 20.9 64.6 14.4 6.5 Avg. Emp. Wrkwk. 6.3 16.7 71.4 12.0 4.7 8.3 8.5 77.4 9.8 -1.3 Capital Ex. -- -- -- -- -- -4.5 17.7 72.1 10.2 7.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through September 18, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: September 21, 2023, at 8:30 a.m. ET. August 2023 Note: Survey responses were collected from August 7 to August 14. Manufacturing activity in the region expanded overall, according to the firms responding to the August Manufacturing Business Outlook Survey. The survey’s indicators for general activity, new orders, and shipments were all positive for the first time since May 2022. However, the firms reported a decline in employment, on balance. The price indexes remained near long-run averages. Expectations for growth over the next six months were less widespread, as most of the survey’s future indexes remained positive but declined. Key Current Indicators Turn Positive The diffusion index for current general activity rose from a reading of -13.5 last month to 12.0 this month, its first positive reading since August 2022. Almost 25 percent of the firms reported increases (up from 17 percent from last month), exceeding the 13 percent reporting decreases (down from 30 percent); 58 percent of the firms reported no change in current activity (up from 49 percent last month). The index for new orders - which had been negative for 14 consecutive months - climbed 32 points to 16.0, and the shipments index rose 18 points to 5.7. On balance, the firms reported a decline in employment, and the employment index moved down 5 points to -6.0. Over 18 percent of the firms reported a decrease in employment, compared with 12 percent that reported an increase; most firms (70 percent) reported no change. The average workweek index rose 9 points to 6.3. Price Indexes Remain Near Long-Run Averages On balance, the firms reported overall increases in prices, but both price indexes remain near their long-run averages. The prices paid diffusion index rose 11 points to 20.8. More than 27 percent of the firms reported increases in input prices, while 6 percent reported decreases; 66 percent reported no change. The current prices received index decreased 9 points to 14.1. More than 27 percent of the firms reported increases in the prices of their own goods, 13 percent reported decreases, and 59 percent reported no change. Firms Expect Lower Increases in Prices from Last Quarter In this month’s special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 4.0 percent, down from 4.5 percent when this question was last asked in May. The firms reported a median increase of 5.0 percent in their own prices over the past year, down from 6.0 percent last quarter. The firms’ median forecast for the rate of inflation for U.S. consumers over the next year was 4.0 percent, down from 5.0 percent in May. Over the long run, the firms’ median forecast for the 10-year average inflation rate was 3.5 percent, up slightly from 3.3 percent. Future Indicators Soften The diffusion index for future general activity dropped 25 points to 3.9, its lowest reading since May. Almost 27 percent of the firms expect an increase in activity over the next six months, slightly exceeding the 23 percent that expect a decrease. The future new orders and shipments indexes also declined. The future new orders index fell from 38.2 to 18.2, and the future shipments index decreased from 37.3 to 14.9. The firms continue to expect increases in employment overall, but the future employment index declined 9 points to 12.0. Both future price indexes rose to readings above their long-run averages. The future capital expenditures index fell 13 points to -4.5, its first negative reading since April. Summary Responses to the August Manufacturing Business Outlook Survey suggest overall expansion in the region’s manufacturing sector this month. The indicators for current activity, new orders, and shipments rose into positive territory. The firms continued to indicate overall increases in prices and an overall decline in employment. The survey’s future indexes suggest less widespread expectations for growth over the next six months. Special Questions (August 2023) Please list the annual percent change with respect to the following: Current Previous (May 2023) For your firm: Forecast for next year (2023Q3-2024Q3) 1. Prices your firm will receive (for its own goods and services sold). 4.0 4.5 2. Compensation your firm will pay per employee (for wages and benefits). 4.0 4.0 Last year's price change (2022Q3-2023Q3) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 5.0 6.0 For U.S. consumers: 4. Prices U.S. consumers will pay for goods and services over the next year. 4.0 5.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2023-2032). 3.5 3.3 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns August 2023 August vs. July Six Months from Now vs. August Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -13.5 24.8 58.4 12.8 12.0 29.1 26.7 47.2 22.8 3.9 Conditions New Orders -15.9 26.3 62.2 10.4 16.0 38.2 37.9 42.4 19.7 18.2 Shipments -12.5 19.4 66.9 13.7 5.7 37.3 37.4 40.1 22.5 14.9 Unfilled Orders -15.1 20.7 53.8 25.5 -4.8 9.2 20.3 62.9 16.5 3.8 Delivery Times -12.9 5.2 81.6 12.3 -7.0 -2.9 5.5 76.8 16.7 -11.3 Inventories -1.0 8.9 68.9 19.1 -10.2 -5.5 10.4 66.6 17.7 -7.3 Prices Paid 9.5 26.9 65.9 6.1 20.8 33.8 53.4 46.1 0.3 53.0 Prices Received 23.0 27.1 58.8 13.0 14.1 20.8 45.5 45.4 4.9 40.6 Number of Emp. -1.0 12.2 69.5 18.3 -6.0 21.3 22.2 67.6 10.2 12.0 Avg. Emp. Wrkwk. -3.0 15.4 75.3 9.1 6.3 16.5 17.9 72.5 9.6 8.3 Capital Ex. -- -- -- -- -- 8.6 11.1 73.2 15.6 -4.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through August 14, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: August 17, 2023, at 8:30 a.m. ET. July 2023 Note: Survey responses were collected from July 10 to July 17. Manufacturing activity in the region continued to decline overall, according to the firms responding to the July Manufacturing Business Outlook Survey. The survey’s indicators for general activity and new orders remained negative. Furthermore, the index for shipments declined and turned negative. The employment index suggests mostly steady employment overall. The prices paid index remained below its long-run average, while the prices received index rose. Most future indicators improved, suggesting more widespread expectations for overall growth over the next six months. Current Indicators Remain Weak The diffusion index for current general activity was little changed at a reading of -13.5 this month, its 11th consecutive negative reading. More than 30 percent of the firms reported decreases, exceeding the 17 percent reporting increases; 49 percent of the firms reported no change in current activity. The index for new orders declined 5 points to -15.9, the index’s 14th consecutive negative reading. The current shipments index dropped sharply from 9.9 last month to -12.5 this month. More than 29 percent of the firms reported decreases in shipments (up from 21 percent last month), compared with 17 percent that reported increases (down from 31 percent); 51 percent reported no change (up from 45 percent). On balance, the firms reported mostly steady levels of employment. The employment index ticked down from a reading of -0.4 last month to -1.0 this month. Similar shares of the firms reported decreases (14 percent) and increases in employment (13 percent); most firms (72 percent) reported no change. The average workweek index rose from -8.2 to 3.0. Prices Paid Index Remains Below Long-Run Average, Prices Received Index Rises The prices paid diffusion index declined 1 point to 9.5 in July. One-fifth of the firms reported increases in input prices, and 11 percent reported decreases; 68 percent reported no change. On balance, the firms reported increases in the prices of their own goods. The current prices received index climbed from a near-zero reading in June to 23.0 in July, the index’s highest reading since January. Nearly 29 percent of the firms reported increases, 6 percent reported decreases, and 63 percent reported no change. Firms Continue to Expect Increases for Wages In this month’s special questions, the firms were asked about changes in wages and compensation over the past three months, as well as their updated expectations for changes in various input and labor costs for the current year (see Special Questions). Nearly 58 percent of the firms indicated wages and compensation costs had increased over the past three months, 43 percent reported no change, and none reported decreases. Most firms (60 percent) reported not needing to adjust their 2023 budgets for wages and compensation since the beginning of the year; however, 30 percent noted they are planning to increase wages and compensation by more than originally planned, and 15 percent noted they are planning to increase wages and compensation sooner than originally planned. The firms still expect cost increases across all categories of expenses in 2023, and the median expected increases were in line with or slightly lower than expectations for most categories when this question was last asked in April. Responses indicate a median expected increase of 3 to 4 percent for wages and of 4 to 5 percent for total compensation (wages plus benefits), both unchanged from April. Future Indicators Rise to Long-Run Averages The diffusion index for future general activity jumped from a reading of 12.7 in June to 29.1 in July, the index’s highest reading since August 2021. Nearly 40 percent of the firms expect an increase in activity over the next six months (up from 33 percent last month), and 11 percent expect a decrease (down from 20 percent); 46 percent expect no change (up from 44 percent). The future new orders index climbed 24 points to 38.2, while the future shipments index rose 9 points to 37.3. On balance, the firms continued to expect increases in employment over the next six months, and the future employment index increased from a reading of 13.1 to 21.3. The future price indexes suggest that firms expect price increases over the next six months, but both indexes remained below their long-run averages. The future capital expenditures index ticked down from 9.9 to 8.6. Summary Responses to the July Manufacturing Business Outlook Survey suggest continued overall declines in the region’s manufacturing sector this month. The indicators for current activity and new orders remained negative, while the index for shipments turned negative. The firms reported overall increases in prices received and prices paid. The survey’s future indexes improved and suggest that respondents expect growth over the next six months. Special Questions (July 2023) 1. How have wages and compensation changed at your firm over the past three months? Percent (%) Increased 57.5 No change 42.5 Decreased 0.0 2. Since the beginning of the year, have you adjusted your budget for wages and compensation for 2023?* Yes, and we are planning to increase wages and compensation by more than originally planned. 30.0 Yes, and we are planning to increase wages and compensation sooner than originally planned. 15.0 No, we have not needed to make adjustments. 60.0 Other 2.5 *Percentages do not sum to 100 because more than one option could be selected. 3. What percentage change in costs do you now expect for the following categories over all of 2023?** Energy Other Inter- Wages Health Non- Wages + (%) Raw mediate (%) Benefits health Health Materials goods (%) Benefits Benefits + (%) (%) (%) Nonhealth Benefits (%) Decline of more than 1% 5.3 18.4 0.0 0.0 5.3 0.0 2.7 No change 28.9 21.1 30.6 2.6 15.8 42.1 5.4 Increase of 1-2% 15.8 7.9 2.8 5.3 5.3 10.5 5.4 Increase of 2-3% 7.9 18.4 27.8 15.8 2.6 13.2 10.8 Increase of 3-4% 10.5 5.3 5.6 34.2 15.8 13.2 16.2 Increase of 4-5% 7.9 7.9 19.4 28.9 18.4 13.2 18.9 Increase of 5-7.5% 5.3 13.2 8.3 5.3 15.8 5.3 18.9 Increase of 7.5-10% 5.3 5.3 2.8 5.3 10.5 2.6 13.5 Increase of 10-12.5% 2.6 2.6 0.0 2.6 5.3 0.0 8.1 Increase of more than 12.5% 0.0 0.0 2.8 0.0 2.6 0.0 0.0 ------------------------------------ ------- ------------------------- ------ Median Exp. Change 1-3% 2-3% 2-3% 3-4% 4-5% 1-2% 4-5% Median Exp. Change (April 2023) 3-4% 2-3% 3-4% 3-4% 3-4% 2-3% 4-5% **The firms responded to more detailed changes than shown in the provided ranges. Summary of Returns July 2023 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 -13.7 16.7 48.8 30.3 -13.5 12.7 39.6 46.2 10.5 29.1 Conditions New Orders -11.0 18.2 45.9 34.2 -15.9 14.1 47.1 40.8 8.9 38.2 Shipments 9.9 16.6 50.5 29.1 -12.5 28.3 46.2 41.2 8.9 37.3 Unfilled Orders -18.5 9.9 57.2 25.0 -15.1 -9.8 28.7 47.7 19.4 9.2 Delivery Times -16.1 7.8 69.6 20.7 -12.9 -10.6 11.6 71.2 14.5 -2.9 Inventories -3.5 13.2 65.8 14.2 -1.0 -19.5 17.7 55.4 23.2 -5.5 Prices Paid 10.5 20.1 67.6 10.5 9.5 23.5 42.3 46.3 8.5 33.8 Prices Received 0.1 28.8 63.3 5.8 23.0 17.4 29.0 59.4 8.2 20.8 Number of Emp. -0.4 13.1 72.2 14.0 -1.0 13.1 31.6 56.5 10.3 21.3 Avg. Emp. Wrkwk. -8.2 8.7 76.0 11.8 -3.0 0.6 24.5 64.4 8.0 16.5 Capital Ex. -- -- -- -- -- 9.9 18.8 66.9 10.2 8.6 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through July 17, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: July 20, 2023, at 8:30 a.m. ET. June 2023 Note: Survey responses were collected from June 5 to June 12. Manufacturing activity in the region continued to decline overall, according to the firms responding to the June Manufacturing Business Outlook Survey. The survey’s indicators for general activity and new orders remained negative. However, the index for shipments rose and turned positive. The employment index suggests steady employment overall. The price indexes remained below long-run averages. Most future indicators improved, but expectations for growth over the next six months remained tempered. Current Indicators Remain Weak The diffusion index for current general activity declined from a reading of -10.4 last month to -13.7 this month, its 10th consecutive negative reading. One-third of the firms reported decreases, exceeding the 20 percent reporting increases; 45 percent of the firms reported no change in current activity. The index for new orders declined 2 points to -11.0, the index’s 13th consecutive negative reading. The current shipments index rose 15 points to 9.9, its highest reading since January. Over 31 percent of the firms reported increases in shipments (up from 21 percent last month) compared with 21 precent that reported decreases (down from 26 percent); 45 percent reported no change (down from 53 percent). The index for delivery times fell 7 points to -16.1, the index’s 10th consecutive negative reading. On balance, the firms reported mostly steady levels of employment. The employment index rose 8 points to a near-zero reading. Similar shares of the firms reported increases and decreases in employment (11 percent); most firms (75 percent) reported no change. The average workweek index ticked down from -7.7 to -8.2. Price Indexes Remain Below Long-Run Averages The prices paid diffusion index was little changed at 10.5. Twenty-two percent of the firms reported increases in input prices, and 12 percent reported decreases; 66 percent reported no change. On balance, the firms reported no change in the prices of their own goods. The current prices received index rose 7 points from a three-year low in May to 0.1 in June, marking the index’s first increase since January. More than 59 percent of the firms reported no change, 19 percent reported increases, and 19 percent reported decreases. Firms Report Higher Production, Little Change in Capacity Utilization In this month’s special questions, the firms were asked to estimate their total production growth for the second quarter ending this month compared with the first quarter of 2023 (see Special Questions). A higher share of firms reported an increase in production (46 percent) compared with the share reporting a decrease (24 percent). Regarding firms’ capacity utilization rate for the current quarter and one year ago, the median current capacity utilization rate reported among the responding firms was unchanged at 70 to 80 percent. Although most firms reported labor supply and supply chains as slight or moderate constraints to capacity utilization, 22 percent indicated labor as a significant constraint, and 16 percent indicated supply chains as a significant constraint. Looking ahead over the next three months, most firms expect the impacts of various factors to stay the same; however, 25 percent of the firms expect the impacts of energy markets to worsen, up from 8 percent when this question was asked in March. Additionally, 23 percent of the firms expect financial capital impacts to worsen over the next three months, unchanged from March. Future Indicators Rise The diffusion index for future general activity jumped from a reading of -10.3 in May to 12.7 in June, the index’s first positive reading in four months and highest reading since March 2022. Nearly 33 percent of the firms expect an increase in activity over the next six months (up from 27 percent last month), and 20 percent expect a decrease (down from 37 percent); 44 percent expect no change (up from 37 percent). The future new orders index increased 16 points to 14.1, while the future shipments index climbed 24 points to 28.3. On balance, the firms continued to expect increases in employment over the next six months. The future employment index edged up from a reading of 12.6 to 13.1. The future price indexes suggest that firms expect price increases over the next six months, but both indexes declined and remained below their long-run averages. The future capital expenditures index increased from 2.5 to 9.9, its highest reading since January. Summary Responses to the June Manufacturing Business Outlook Survey suggest continued overall declines in the region’s manufacturing sector this month. The indicators for current activity and new orders remained negative, while the index for shipments turned positive. The firms reported relatively no change in prices received and continued to indicate overall increases in prices paid. The survey’s future indexes improved but continued to suggest subdued expectations for growth over the next six months. Special Questions (June 2023) 1. How will your firm’s total production for the second quarter of 2023 compare with that of the first quarter of 2023? % of firms An increase of: 10% or more 13.5 5-10% 8.1 0-5% 24.3 Subtotal 45.9 No change 29.7 A decline of: 0-5% 13.5 5-10% 2.7 10% or more 8.1 Subtotal 24.3 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2023:Q2) and one year ago (2022:Q2)? 2023:Q2 2022:Q2 Capacity Utilization Rate % of reporters % of reporters Less than 30% 0.0 0.0 30-40% 2.6 0.0 40-50% 2.6 2.6 50-60% 5.3 7.9 60-70% 21.1 7.9 70-80% 34.2 36.8 80-90% 18.4 23.7 90-100% 15.8 21.1 Median Utilization Rate 70-80 70-80 3. In the current quarter, to what degree have the following factors acted as constraints on capacity utilization? Not at all Slightly Moderately Significantly (%) (%) (%) (%) COVID-19 mitigation measures 100.0 0.0 0.0 0.0 Energy markets 80.6 8.3 11.1 0.0 Financial capital 70.3 16.2 10.8 2.7 Labor supply 21.6 24.3 32.4 21.6 Supply chains 27.0 40.5 16.2 16.2 Other factors 75.0 0.0 10.0 15.0 4. Over the next three months, how do you expect the impacts of the following factors as constraints on capacity utilization to change? Worsen Stay the same Improve (%) (%) (%) COVID-19 mitigation measures 0.0 90.9 9.1 Energy markets 25.0 75.0 0.0 Financial capital 22.9 77.1 0.0 Labor supply 8.3 72.2 19.4 Supply chains 5.7 62.9 31.4 Other factors 4.8 95.2 0.0 Summary of Returns June 2023 June vs. May Six Months from Now vs. June Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -10.4 19.5 44.9 33.2 -13.7 -10.3 32.6 43.9 19.9 12.7 Conditions New Orders -8.9 23.3 39.1 34.4 -11.0 -2.3 36.3 38.6 22.2 14.1 Shipments -4.7 31.2 45.2 21.2 9.9 4.5 37.8 51.1 9.5 28.3 Unfilled Orders 0.8 6.7 66.7 25.2 -18.5 -10.1 16.2 56.6 26.0 -9.8 Delivery Times -9.3 1.0 80.2 17.1 -16.1 -31.0 12.0 64.9 22.7 -10.6 Inventories 6.4 14.1 65.3 17.6 -3.5 -2.2 16.8 44.8 36.3 -19.5 Prices Paid 10.9 22.0 65.5 11.5 10.5 28.3 34.0 53.7 10.5 23.5 Prices Received -7.0 18.7 59.2 18.6 0.1 24.1 33.2 49.6 15.8 17.4 Number of Emp. -8.6 11.1 74.8 11.4 -0.4 12.6 22.8 66.7 9.8 13.1 Avg. Emp. Wrkwk. -7.7 1.9 86.6 10.1 -8.2 -0.2 10.7 79.1 10.1 0.6 Capital Ex. -- -- -- -- -- 2.5 26.7 54.8 16.8 9.9 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through June 12, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: June 15, 2023, at 8:30 a.m. ET. May 2023 Note: Survey responses were collected from May 8 to May 15. Manufacturing activity in the region continued to decline overall, according to the firms responding to the May Manufacturing Business Outlook Survey. The survey’s indicators for general activity, new orders, and shipments rose from last month but remained negative. On balance, the firms also reported a decline in employment. The price indexes remained below long-run averages, with the prices received index declining further. The survey’s future indexes continued to reflect muted expectations for growth over the next six months. Current Indicators Remain Negative The diffusion index for current general activity rose from a reading of -31.3 last month to -10.4 this month, its ninth consecutive negative reading. Nearly 35 percent of the firms reported decreases (unchanged from last month), exceeding the 25 percent reporting increases (up from 3 percent); 41 percent of the firms reported no change in current activity (down from 59 percent last month). The indexes for new orders and shipments both increased for the second consecutive month but remained negative. The index for current new orders rose 14 points to -8.9, and the current shipments index edged up 3 points to -4.7. On balance, the firms reported a decline in employment. The employment index fell from -0.2 to -8.6, the index’s third consecutive negative reading. Over 15 percent of the firms reported a decrease in employment, and 7 percent reported an increase; most firms (76 percent) reported no change. The average workweek index was little changed at -7.7. Price Indexes Remain Below Long-Run Averages The prices paid diffusion index ticked up 3 points to 10.9, after reaching a near three-year low last month. Over one-quarter of the firms reported increases in input prices, and 15 percent reported decreases; 59 percent reported no change. The current prices received index fell 4 points to -7.0, its fourth consecutive decline and lowest reading since April 2020. Twenty-two percent of the firms reported decreases in the prices of their own goods, 15 percent reported increases, and 63 percent reported no change. Firms Expect Steady Increases in Prices from Last Quarter In this month’s special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 4.5 percent, unchanged from when this question was last asked in February. The firms reported a median increase of 6.0 percent in their own prices over the past year, down from 7.0 percent in February. The firms’ median forecast for the rate of inflation for U.S. consumers over the next year was 5.0 percent, up from 4.0 percent in February. Over the long run, the firms’ median forecast for the 10-year average inflation rate was 3.3 percent, up from 3.0 percent in February. Future Indicators Soften The diffusion index for future general activity declined 9 points to -10.3, the index’s third consecutive negative reading. Almost 37 percent of the firms expect a decrease in activity over the next six months, exceeding the 27 percent that expect an increase. The future new orders index fell from 9.8 to -2.3, and the future shipments index declined from 13.3 to 4.5. The firms expect increases in employment overall, as the future employment index rose 9 points to 12.6. Both future price indexes rose but remain below their long-run averages. The future capital expenditures index rose 8 points to 2.5, after negative readings in the prior two months. Summary Responses to the May Manufacturing Business Outlook Survey suggest continued overall declines in the region’s manufacturing sector this month. The indicators for current activity, new orders, and shipments rose, but all three remained in negative territory. The firms continued to indicate overall increases in prices paid and decreases for prices received. The survey’s future indexes continued to suggest tempered expectations for growth over the next six months. Special Questions (May 2023) Please list the annual percent change with respect to the following: Current Previous (Feb. 2023) For your firm: Forecast for next year (2023Q2-2024Q2) 1. Prices your firm will receive (for its own goods and services sold). 4.5 4.5 2. Compensation your firm will pay per employee (for wages and benefits). 4.0 4.8 Last year's price change (2022Q2-2023Q2) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 6.0 7.0 For U.S. consumers: 4. Prices U.S. consumers will pay for goods and services over the next year. 5.0 4.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2023-2032). 3.3 3.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns May 2023 May vs. April Six Months from Now vs. May Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -31.3 24.5 40.5 34.9 -10.4 -1.5 26.6 36.6 36.8 -10.3 Conditions New Orders -22.7 27.4 33.6 36.3 -8.9 9.8 23.2 45.6 25.5 -2.3 Shipments -7.3 21.4 52.5 26.1 -4.7 13.3 34.1 31.7 29.6 4.5 Unfilled Orders -11.1 20.7 51.8 20.0 0.8 -16.2 14.5 55.3 24.5 -10.1 Delivery Times -25.0 7.8 73.8 17.1 -9.3 -28.1 4.9 53.8 36.0 -31.0 Inventories -17.9 18.5 63.9 12.1 6.4 -5.7 17.7 47.5 20.0 -2.2 Prices Paid 8.2 25.5 59.4 14.6 10.9 20.0 40.9 40.6 12.6 28.3 Prices Received -3.3 14.9 63.1 22.0 -7.0 11.2 41.9 38.4 17.8 24.1 Number of Emp. -0.2 6.6 76.3 15.1 -8.6 3.8 23.6 60.5 11.0 12.6 Avg. Emp. Wrkwk. -8.4 5.0 82.4 12.6 -7.7 -0.1 9.7 77.2 9.9 -0.2 Capital Ex. -- -- -- -- -- -5.4 15.5 64.7 13.0 2.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through May 15, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: May 18, 2023, at 8:30 a.m. ET. April 2023 Note: Survey responses were collected from April 10 to April 17. Manufacturing activity in the region continued to decline overall in April, according to the firms responding to this month’s Manufacturing Business Outlook Survey. The survey’s broad indicators for activity remained negative, although the indexes for new orders and shipments rose. The employment index suggests steady employment overall. Both price indexes continued to decline. The future indicators suggest that firms’ expectations for growth over the next six months remain subdued. Current Indicators Remain Negative The diffusion index for current general activity decreased 8 points to -31.3 in April, its eighth consecutive negative reading and lowest reading since May 2020. Although most firms reported no change in activity (59 percent), the share of firms reporting decreases (35 percent) exceeded the share of firms reporting increases (3 percent). The indexes for new orders and shipments both remained negative but increased this month: The new orders index rose 6 points to -22.7, and the shipments index climbed 18 points to -7.3. Almost 28 percent of the firms reported decreases in shipments (down from 31 percent last month) compared with 20 percent that reported increases (up from 6 percent last month). On balance, the firms reported mostly steady levels of employment. The employment index rose 10 points to a near-zero reading. Similar shares of the firms reported increases and decreases in employment (16 percent); most firms (67 percent) reported no change. The average workweek index rose from -22.0 to -8.4. Price Increases Are Less Widespread The indicators for prices paid and prices received declined to their lowest readings since mid-2020. The prices paid index declined for the second consecutive month, falling 15 points to 8.2. Almost 19 percent of the firms reported increases in input prices, while 10 percent reported decreases; 70 percent of the firms reported no change. The current prices received index fell 11 points to -3.3, its third consecutive decline and first negative reading since May 2020. Over 7 percent of the firms reported increases in prices received for their own goods this month, 10 percent reported decreases, and 83 percent reported no change. Firms Expect Smaller Increases for Wages In this month’s special questions, the firms were asked about changes in wages and compensation over the past three months, as well as their updated expectations for changes in various input and labor costs for the current year (see Special Questions). More than 55 percent of the firms indicated wages and compensation costs had increased over the past three months, 45 percent reported no change, and none reported decreases. Most firms (58 percent) have reported not needing to adjust their 2023 budgets for wages and compensation since the beginning of the year; however, almost 33 percent noted they are planning to increase wages and compensation by more than originally planned, and 10 percent noted they are planning to increase wages and compensation sooner than originally planned. The firms still expect cost increases across all categories of expenses in 2023, and the median expected increases were in line with or slightly lower than expectations for most categories when this question was last asked in January. Responses indicate a median expected increase of 3 to 4 percent for wages, down slightly from 4 to 5 percent from January, and of 4 to 5 percent for total compensation (wages plus benefits), unchanged from January. Future Indicators Remain Weak The diffusion index for future general activity rose 7 points but remained negative at -1.5. More than 32 percent of the firms expect decreases in future activity (up from 29 percent last month), compared with 31 percent that expect increases (up from 21 percent); 34 percent of the firms expect no change in future activity. The future new orders index rose 5 points to 9.8, and the future shipments index rose 6 points to 13.3. The future employment index ticked down 3 points to 3.8. Nearly 72 percent of the firms expect steady employment levels over the next six months, 14 percent of the firms expect higher employment, and 11 percent expect lower employment. The future capital expenditures indicator edged down from -3.8 to -5.4, its lowest reading since March 2009. Summary Responses to the April Manufacturing Business Outlook Survey suggest continued declines in regional manufacturing activity this month. The indicators for current activity, new orders, and shipments remained negative. The firms indicated overall steady employment and less widespread price increases. The survey’s broad indicators for future activity suggest that respondents’ expectations for growth over the next six months remain subdued. Special Questions (April 2023) 1. How have wages and compensation changed at your firm over the past three months? Percent (%) Increased 55.3 No change 44.7 Decreased 0.0 2. Since the beginning of the year, have you adjusted your budget for wages and compensation for 2023?* Yes, and we are planning to increase wages and compensation by more than originally planned. 32.5 Yes, and we are planning to increase wages and compensation sooner than originally planned. 10.0 No, we have not needed to make adjustments. 57.5 Other 2.5 *Percentages do not sum to 100 because more than one option could be selected. 3. What percentage change in costs do you now expect for the following categories over all of 2023?** Energy Other Inter- Wages Health Non- Wages + (%) Raw mediate (%) Benefits health Health Materials goods (%) Benefits Benefits + (%) (%) (%) Nonhealth Benefits (%) Decline of more than 1% 2.6 18.4 0.0 5.3 2.6 0.0 2.9 No change 21.1 21.1 25.0 13.2 18.4 36.1 8.8 Increase of 1-2% 5.3 5.3 9.4 0.0 2.6 11.1 11.8 Increase of 2-3% 10.5 10.5 12.5 15.8 10.5 2.8 5.9 Increase of 3-4% 13.2 10.5 12.5 15.8 18.4 25.0 11.8 Increase of 4-5% 15.8 10.5 9.4 34.2 10.5 13.9 20.6 Increase of 5-7.5% 15.8 5.3 18.8 13.2 7.9 5.6 20.6 Increase of 7.5-10% 10.5 5.3 3.1 2.6 13.2 2.8 8.8 Increase of 10-12.5% 0.0 7.9 0.0 0.0 13.2 2.8 5.9 Increase of more than 12.5% 0.0 5.3 6.3 0.0 0.0 0.0 2.9 ------------------------------------ ------- ------------------------- ------ Median Exp. Change 3-4% 2-3% 3-4% 3-4% 3-4% 2-3% 4-5% Median Exp. Change (January 2023) 2-3% 3-4% 3-4% 4-5% 4-5% 3-4% 4-5% **The firms responded to more detailed changes than shown in the provided ranges. Summary of Returns April 2023 April vs. March Six Months from Now vs. April Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -23.2 3.3 58.7 34.6 -31.3 -8.0 30.9 33.8 32.4 -1.5 Conditions New Orders -28.2 15.2 46.0 37.9 -22.7 4.6 36.2 36.3 26.3 9.8 Shipments -25.4 20.4 51.5 27.7 -7.3 7.8 36.2 37.9 22.9 13.3 Unfilled Orders -21.3 13.3 62.1 24.3 -11.1 -13.1 12.0 59.9 28.2 -16.2 Delivery Times -24.3 0.0 75.0 25.0 -25.0 -24.0 7.3 53.6 35.4 -28.1 Inventories -11.2 2.9 73.4 20.8 -17.9 -12.9 24.9 40.5 30.6 -5.7 Prices Paid 23.5 18.5 70.1 10.3 8.2 26.8 35.8 48.3 15.8 20.0 Prices Received 7.9 7.1 82.6 10.4 -3.3 7.9 34.5 42.1 23.4 11.2 Number of Emp. -10.3 16.0 66.8 16.2 -0.2 6.9 14.3 71.8 10.5 3.8 Avg. Emp. Wrkwk. -22.0 4.9 81.3 13.3 -8.4 7.8 16.9 66.2 17.0 -0.1 Capital Ex. -- -- -- -- -- -3.8 15.4 61.8 20.7 -5.4 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through April 17, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: April 20, 2023, at 8:30 a.m. ET. March 2023 Note: Survey responses were collected from March 6 to March 13. Manufacturing activity in the region continued to decline overall, according to the firms responding to March’s Manufacturing Business Outlook Survey. The survey’s broad indicators for current activity were all negative. On balance, the firms also reported a decline in employment. Most future indicators weakened, suggesting that the firms continue to have tempered expectations for growth over the next six months. Current Indicators Weaken The diffusion index for current general activity remained negative but ticked up 1 point to -23.2, its seventh consecutive negative reading. More than 34 percent of the firms reported declines in activity, while 11 percent reported increases; the majority (53 percent) reported no change. The indicators for new orders and shipments both declined to their lowest readings since May 2020: The shipments index dropped sharply from 8.7 last month to -25.4 this month, and the new orders index fell 15 points to -28.2. Over 35 percent of the firms reported declines in new orders (unchanged from last month), while 7 percent reported increases (down from 22 percent); 58 percent reported no change (up from 41 percent). On balance, the firms reported a decline in employment. The employment index decreased from 5.1 to -10.3, the index’s second negative reading since June 2020 and its lowest reading since May 2020. Over 73 percent of the firms reported steady employment levels (up from 61 percent last month), 16 percent reported lower employment (up from 15 percent), and 6 percent reported higher employment (down from 21 percent). The average workweek index fell from -3.2 to -22.0. Price Indexes Remain Near Long-Run Averages The firms continued to report overall increases in prices, but the indexes for prices paid and prices received both declined. The current prices paid index ticked down 3 points to 23.5, its lowest reading since August 2020 and near its long-run average. Nearly 35 percent of the firms reported increases in input prices, while 11 percent reported decreases; 53 percent of the firms reported no change. The current prices received index decreased 7 points to 7.9, its lowest reading since June 2020. Roughly 23 percent of the firms reported increases in prices received for their own goods this month, while 15 percent reported decreases; 62 percent reported no change. Firms Report Higher Production, Little Change in Capacity Utilization In this month’s special questions, the firms were asked to estimate their total production growth for the first quarter ending this month compared with the fourth quarter of 2022 (see Special Questions). A higher share of firms reported an increase in production (46 percent) compared with the share reporting a decrease (32 percent). Regarding firms’ capacity utilization rate for the current quarter and one year ago, the median current capacity utilization rate reported among the responding firms was unchanged at 70 to 80 percent. Although most firms reported labor supply and supply chains as slight or moderate constraints to capacity utilization, 27 percent indicated labor as a significant constraint and 12 percent indicated supply chains as a significant constraint. Looking ahead over the next three months, most firms expect the impacts of various factors to stay the same; however, 23 percent of the firms expect financial capital impacts to worsen, down slightly from 26 percent when this question was asked in December. Future Indicators Soften The diffusion index for future general activity decreased for the second consecutive month, falling 10 points to -8.0. The share of firms that expect decreases in activity (29 percent) exceeded the share of firms that expect increases (21 percent); 45 percent expect no change. The future new orders index declined 5 points but remained positive at 4.6, while the future shipments index increased from 4.6 to 7.8. On balance, the firms continued to expect increases in employment over the next six months, but the future employment index ticked down 1 point to 6.9. Although the future prices paid index rose 9 points to 26.8, both future price indexes were below their long-run averages. The future capital expenditures index decreased from 7.5 to -3.8, the index’s first negative reading since September 2009. Summary Responses to the March Manufacturing Business Outlook Survey suggest continued declines for the region’s manufacturing sector. The survey’s indicators for general activity, new orders, and shipments were all negative, and the firms reported a decline in employment, on balance. The survey’s broad indicators for future activity continued to suggest subdued expectations for growth over the next six months. Special Questions (March 2023) 1. How will your firm’s total production for the first quarter of 2023 compare with that of the fourth quarter of 2022? % of firms An increase of: 10% or more 7.3 5-10% 19.5 0-5% 19.5 Subtotal 46.3 No change 22.0 A decline of: 0-5% 7.3 5-10% 12.2 10% or more 12.2 Subtotal 31.7 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2023:Q1) and one year ago (2022:Q1)? 2023:Q1 2022:Q1 Capacity Utilization Rate of reporters % of reporters Less than 30% 0.0 4.9 30-40% 7.3 2.4 40-50% 2.4 2.4 50-60% 7.3 7.3 60-70% 24.4 19.5 70-80% 31.7 29.3 80-90% 14.6 19.5 90-100% 12.2 14.6 Median Utilization Rate 70-80 70-80 3. In the current quarter, to what degree have the following factors acted as constraints on capacity utilization? Not at all Slightly Moderately Significantly (%) (%) (%) (%) COVID-19 mitigation measures 85.4 12.2 2.4 0.0 Energy markets 75.6 19.5 2.4 2.4 Financial capital 80.5 7.3 4.9 7.3 Labor supply 26.8 14.6 31.7 26.8 Supply chains 29.3 26.8 31.7 12.2 Other factors 63.6 4.5 13.6 18.2 4. Over the next three months, how do you expect the impacts of the following factors as constraints on capacity utilization to change? Worsen Stay the same Improve (%) (%) (%) COVID-19 mitigation measures 0.0 89.5 10.5 Energy markets 7.9 76.3 15.8 Financial capital 23.1 74.4 2.6 Labor supply 7.5 65.0 27.5 Supply chains 2.6 56.4 41.0 Other factors 0.0 87.0 13.0 Summary of Returns March 2023 March vs. February Six Months from Now vs. March Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -24.3 10.9 53.4 34.1 -23.2 1.7 21.4 45.4 29.4 -8.0 Conditions New Orders -13.6 7.0 57.8 35.2 -28.2 9.2 33.2 38.1 28.6 4.6 Shipments 8.7 5.8 61.6 31.2 -25.4 4.6 32.0 43.8 24.2 7.8 Unfilled Orders -17.0 4.4 65.6 25.7 -21.3 -12.4 13.5 57.2 26.6 -13.1 Delivery Times -13.6 0.0 75.7 24.3 -24.3 -24.0 4.9 63.8 28.9 -24.0 Inventories 15.3 10.6 66.6 21.8 -11.2 -4.9 19.0 46.9 31.8 -12.9 Prices Paid 26.5 34.8 52.7 11.3 23.5 17.9 40.2 46.4 13.4 26.8 Prices Received 14.9 22.8 62.4 14.8 7.9 19.1 23.6 57.8 15.8 7.9 Number of Emp. 5.1 6.1 73.3 16.4 -10.3 8.1 20.0 66.9 13.1 6.9 Avg. Emp. Wrkwk. -3.2 0.9 73.1 22.9 -22.0 -2.1 15.0 77.6 7.2 7.8 Capital Ex. -- -- -- -- -- 7.5 12.6 71.0 16.4 -3.8 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through March 13, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: March 16, 2023, at 8:30 a.m. ET. February 2023 Note: Survey responses were collected from February 6 to February 13. Manufacturing activity in the region continued to decline, according to the firms responding to the February Manufacturing Business Outlook Survey. The general activity index declined further, the new orders index remained negative, and the shipments index remained positive but low. The employment index declined but remained positive, and the price indexes continued to suggest overall increases but were in line with long-run averages. Most of the survey’s future indicators were positive but low, suggesting tempered expectations for growth over the next six months. Current Indicators Remain Weak The diffusion index for current activity fell from a reading of -8.9 last month to -24.3 this month, its sixth consecutive negative reading and lowest reading since May 2020. Thirty-one percent of the firms reported decreases (down from 33 percent last month), exceeding the 7 percent reporting increases (down from 24 percent); 57 percent of the firms reported no change in current activity (up from 37 percent last month). The index for current new orders declined 3 points to -13.6, its ninth consecutive negative reading, and the current shipments index edged down 2 points to 8.7. The current employment index remained positive but decreased from 10.9 to 5.1 this month. Most firms (61 percent) reported steady employment levels, 21 percent of the firms reported higher employment, and 15 percent reported lower employment. The average workweek index fell from 4.0 to -3.2. Price Indexes Near Long-Run Averages The prices paid diffusion index ticked up 2 points to 26.5, after reaching a two-and-a-half-year low last month. More than 34 percent of the firms reported increases in input prices, and 8 percent reported decreases; 55 percent reported no change. The current prices received index dropped 15 points to 14.9, its lowest reading since February 2021 and slightly above its long-run average. Almost 24 percent of the firms reported increases in the prices of their own goods, 9 percent reported decreases, and 65 percent reported no change. Firms Expect Lower Increases in Prices from Last Quarter In this month’s special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 4.5 percent, down slightly from 4.8 percent when this question was last asked in November. The firms reported a median increase of 7.0 percent in their own prices over the past year, down from 7.5 percent in November. The firms’ median forecast for the rate of inflation for U.S. consumers over the next year was 4.0 percent, down from 5.0 percent in November. Over the long run, the firms’ median forecast for the 10-year average inflation rate was 3.0 percent, down from 4.0 percent in November. Future Indicators Remain Soft 80 The diffusion index for future general activity declined 3 points but remained positive at 1.7. Almost 29 percent of the firms expect an increase in activity over the next six months, narrowly exceeding the 27 percent that expect a decrease. The future new orders index rose from 2.4 to 9.2, while the future shipments index declined from 9.1 to 4.6. The firms expect increases in employment overall, as the future employment index rose 10 points to 8.1, after dipping into negative territory last month. Both future price indexes were below their long-run averages. The future capital expenditures index edged down 3 points to 7.5. Summary Responses to the February Manufacturing Business Outlook Survey suggest continued overall declines in the region’s manufacturing sector this month. The indicators for current activity and new orders remained in negative territory, while the shipments index remained positive but low. The firms continued to indicate overall increases in prices paid and received. The survey’s future indexes continued to suggest tempered expectations for growth over the next six months. Special Questions (February 2023) Please list the annual percent change with respect to the following: Current Previous (Nov. 2022) For your firm: Forecast for next year (2023Q1-2024Q1) 1. Prices your firm will receive (for its own goods and services sold). 4.5 4.8 2. Compensation your firm will pay per employee (for wages and benefits). 4.8 5.0 Last year's price change (2022Q1-2023Q1) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 7.0 7.5 For U.S. consumers: 4. Prices U.S. consumers will pay for goods and services over the next year. 4.0 5.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2023-2032). 3.0 4.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns February 2023 February vs. January Six Months from Now vs. February Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -8.9 6.7 57.0 31.0 -24.3 4.9 28.5 39.1 26.8 1.7 Conditions New Orders -10.9 21.7 41.2 35.3 -13.6 2.4 33.0 42.1 23.9 9.2 Shipments 11.1 26.6 53.4 17.9 8.7 9.1 26.8 47.3 22.3 4.6 Unfilled Orders -19.2 16.6 47.4 33.6 -17.0 -0.6 10.1 64.2 22.5 -12.4 Delivery Times -5.6 11.9 59.6 25.5 -13.6 -9.1 3.3 69.4 27.3 -24.0 Inventories 0.9 20.2 69.0 4.9 15.3 -3.2 18.6 56.7 23.4 -4.9 Prices Paid 24.5 34.2 55.3 7.7 26.5 25.7 37.0 43.9 19.1 17.9 Prices Received 29.9 23.7 64.6 8.8 14.9 21.3 37.8 43.5 18.7 19.1 Number of Emp. 10.9 20.5 61.0 15.4 5.1 -1.9 20.4 67.4 12.3 8.1 Avg. Emp. Wrkwk. 4.0 18.2 59.5 21.3 -3.2 -6.9 15.8 65.5 17.9 -2.1 Capital Ex. -- -- -- -- -- 10.5 18.8 67.2 11.3 7.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through February 13, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: February 16, 2023, at 8:30 a.m. ET. January 2023 Note: Survey responses were collected from January 9 to January 17. Manufacturing activity in the region continued to decline overall, according to the firms responding to the January Manufacturing Business Outlook Survey. The survey’s indicators for general activity, new orders, and shipments rose from last month, but the former two remained negative. The employment index rebounded. The firms reported overall increases in prices: The prices received index remained elevated, while the prices paid index returned to average readings. Most future indicators were positive, but expectations for growth over the next six months were not widespread. Current Indicators Remain Weak The diffusion index for current general activity rose from a revised reading of -13.7 in December to -8.9 in January, its fifth consecutive negative reading and seventh negative reading in the past eight months.* More than 33 percent of the firms reported declines in activity, exceeding the 24 percent that reported increases. The current new orders index rose 11 points but remained negative at -10.9, and the current shipments index climbed 12 points to 11.1 after turning negative in December. Nearly 30 percent of the firms indicated increases in shipments compared with 19 percent that indicated decreases. On balance, the firms reported increases in employment, and the employment index improved from -0.9 in December to 10.9 this month. The majority of responding firms (65 percent) reported steady employment levels, and the share reporting increases (22 percent) exceeded the share reporting decreases (11 percent). The average workweek index also turned positive, rising from -6.6 to 4.0. Prices Paid Index Near Long-Run Average, Prices Received Index Remains Elevated The indexes for prices paid and prices received continue to indicate overall price increases for inputs and firms’ own goods. The prices paid index declined 12 points to 24.5, its lowest reading since August 2020 and slightly below its long-run average. Nearly 40 percent of the firms reported increases in input prices, while 15 percent reported decreases; 45 percent of the firms reported no change. The current prices received index edged up 2 points to 29.9. Almost 39 percent of the firms reported increases in their own prices, 9 percent reported decreases, and 51 percent reported no change. Firms Expect Smaller Cost Increases for 2023 In this month’s special questions, the firms were asked about changes in their various input and labor costs over the past year and their expectations for changes in costs for the coming year (see Special Questions). For all categories, the average percent change in costs expected for 2023 was smaller than the average percent change in costs reported for 2022. The respondents were also asked to rank the importance of various factors in setting prices. Demand for their own goods/services was the most important factor, followed by maintaining steady profit, wage and labor costs, and nonlabor costs. Future Indicators Remain Low The diffusion index for future general activity rose from a revised reading of -0.9 in December to 4.9 this month. Almost 38 percent of the firms expect increases in future activity, 33 percent expect decreases, and 26 percent expect no change. The future new orders and future shipments indexes remained positive but declined 6 points and 11 points, respectively. The future price indexes suggest that firms expect price increases over the next six months, but both indexes declined to their lowest readings since May 2020. The future employment index fell 21 points to -1.9, its first negative reading since February 2016. The share of firms expecting declines in employment (15 percent) narrowly exceeded the share expecting increases (14 percent); most firms (67 percent) expect no changes. Summary Responses to the January Manufacturing Business Outlook Survey suggest continued overall declines in the region’s manufacturing sector this month. The indicators for current activity and new orders improved from their December readings but remained negative. The firms continued to report overall increases in prices, and the prices received index remained elevated. The survey’s future indexes suggest tempered expectations for growth over the next six months. *The survey's annual data revisions, which incorporate updated seasonal factors, were released on January 12, 2023. The full history of revised data is available at https://www.philadelphiafed.org/surveys-and-data/mbos-historical-data. Special Questions (January 2023) 1. What were the percentage change in costs for the following categories for 2022, and what do you expect they will be for 2023? 2022 2023 (Actual) (Expected) Average Median Average Median (%) (%) (%) (%) Energy 9.9 7.5-10 4.6 2-3 Other Raw Materials 11.1 7.5-10 2.8 3-4 Intermediate Goods 9.5 7.5-10 3.2 3-4 Wages 6.6 5-7.5 3.9 4-5 Health Benefits 5.9 4-5 5.8 4-5 Nonhealth Benefits 5.0 3-4 3.8 3-4 Wages + Health Benefits + Nonhealth Benefits 8.6 5-7.5 6.0 4-5 Note: Respondents selected ranges of percentage changes. The listed average percent change is calculated using the midpoints of the ranges of each answer option. 2. Currently, when you think about setting the prices of your goods/services, how important to you are the following factors in making those decisions? Weighted Average* (%) Your competitors' prices 64 The strength of demand for your most important good(s) or service(s) 83 Your wages and labor costs (including benefits) 76 Your nonlabor costs, such as energy prices, materials prices, transportation costs, rent, etc. 76 Maintaining steady profit margins (for price over costs) 77 Interest rates, borrowing rates, and the cost of capital 41 Problems with your supply chains, such as bottlnecks and product shortages 63 The overall rate of inflation in the U.S. economy, as measured by the Consumer Price Index 64 Other 67 *Respondents reported importance on a scale of 1 to 5, with 1 being least important and 5 being most important. The weighted average gives 1 (least important) a weight of 0; 2 a weight of 0.25; 3 a weight of 0.5; 4 a weight of 0.75; and 5 (most important) a weight of 1. Summary of Returns January 2023 January vs. December Six Months from Now vs. January Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business -13.7 24.3 37.0 33.3 -8.9 -0.9 37.7 26.4 32.8 4.9 Conditions New Orders -22.3 28.3 31.1 39.3 -10.9 8.5 33.9 30.7 31.5 2.4 Shipments -0.9 29.9 46.0 18.8 11.1 20.4 30.1 44.3 21.0 9.1 Unfilled Orders -14.1 5.6 63.9 24.7 -19.2 -18.1 17.8 56.3 18.4 -0.6 Delivery Times -7.2 15.9 60.8 21.5 -5.6 -27.0 15.0 55.5 24.1 -9.1 Inventories -3.0 18.8 60.7 17.8 0.9 -13.0 23.6 45.3 26.8 -3.2 Prices Paid 36.3 39.9 44.7 15.4 24.5 42.7 43.2 32.8 17.5 25.7 Prices Received 28.1 38.6 50.9 8.8 29.9 35.2 38.7 39.4 17.4 21.3 Number of Emp. -0.9 21.6 64.7 10.7 10.9 18.9 13.5 66.8 15.4 -1.9 Avg. Emp. Wrkwk. -6.6 15.9 71.2 11.9 4.0 -0.1 7.3 73.7 14.2 -6.9 Capital Ex. -- -- -- -- -- 16.2 24.0 58.8 13.5 10.5 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 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through January 17, 2023. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: January 19, 2023, at 8:30 a.m. ET.