Frequently Asked Questions

The Federal Reserve Bank of Philadelphia’s MBOS is a monthly qualitative survey that asks high-level executives about the direction of change in activity at their manufacturing firms located in the Third District (Delaware, southern New Jersey, and eastern and central Pennsylvania). Sometimes referred to as the Philly Fed Index, the MBOS was launched in 1968 and is the longest-running manufacturing survey compiled by a regional Federal Reserve Bank.

We conduct the MBOS monthly. Typically, we collect responses over an eight-day period that closes the Monday prior to publication.

We usually publish the results at 8:30 a.m. ET on the third Thursday of each month, barring holidays. Although we release the results at that specific time, it’s possible for users to experience a slight delay in accessing the data or report. We publish the text file for the current release first, followed by supporting files and pages.

See the release schedule for the current calendar year. We typically post release dates for the upcoming year in November of the current year.

We ask manufacturers to indicate the direction of change (increase, no change, decrease) from the prior month for overall business activity, as well as for these specific indicators: new orders, shipments, unfilled orders, delivery times, inventories, prices paid, prices received, employment, and average employee workweek. We also ask firms to indicate their expected direction of change over the upcoming six-month period for all these indicators and capital expenditures.

The MBOS also asks special questions that we repeat less frequently than the core monthly questions or that address a current topical event.

See a sample survey questionnaire.

We maintain a panel of business contacts — owners, CEOs, and plant managers — that broadly represents the Third District manufacturing sector.

The panel of firms that receive the MBOS stays largely the same from month to month but slowly evolves over time as firms join or opt to leave. The firms that respond differ slightly each month, as participation in the MBOS is optional. While there is no definitive group of respondents, the firms that have historically responded consistently tend to comprise a consistent share of total responses.

Throughout the survey’s history, we have used a variety of techniques to recruit manufacturing firms for the panel. These have included face-to-face meetings, working with regional chambers of commerce, and postal mailings.

The MBOS captures meaningful information about changes in current business activity and expectations of future activity at manufacturing firms in the Third District. The real-time survey results provide timely insights into economic activity for the month for which data are collected — ahead of the official statistical releases of national economic data.

Historically, the Third District has served as a reasonable proxy for U.S. manufacturing. Trends and comments from District businesses offer valuable insights that help to assess the health of the economy and inform monetary policy discussions.

A diffusion index represents the percentage of firms reporting an increase in a given measure minus the percentage of firms reporting a decrease. The diffusion index indicates the direction and breadth of change for a given indicator; however, it does not measure the magnitude of such change.

For example, if the new orders index increases from a reading of 5 in the prior month to a reading of 20 this month, it means that growth in new orders was more widespread than in the prior month. The index’s increase from 5 to 20 does not necessarily indicate a faster rate of growth from the prior month.

For each indicator (general activity, new orders, etc.), we construct a diffusion index, which is the percentage of firms reporting an increase minus the percentage of firms reporting a decrease. Therefore, each index can take values between -100 and 100, inclusive, and has a midpoint of zero — a value that indicates that the percentage of firms reporting increases was the same as the percentage reporting decreases. Although the percentage of firms reporting no change does not factor into the calculation of a diffusion index, it could affect its interpretation (see example under “How do you interpret changes in the diffusion index?”).

Diffusion indexes aggregate individual qualitative survey responses from firms into quantitative economic measures, which facilitate tracking regional and national conditions over time. Our monthly reports present current index readings and compare them with those of the previous month or other periods of time. We also often note the components of each index, citing the percentage of firms that reported increases, decreases, or no change for a given indicator.

Our September 2024 MBOS release stated that “the firms reported an increase in employment, on balance, after reporting an overall decline last month. The employment index rose from -5.7 to 10.7 this month, the index’s second positive reading in the last three months following mostly negative readings since March 2023. More than 89 percent of the firms reported no change in employment levels this month, the highest share reporting steady employment since December 1978.”

Using this case as an example: We noted that while the employment index had turned positive for a second time after a string of negative readings, most firms reported no change at all. The latter observation matters in the following sense. In this case, the diffusion index of 10.7 was produced because 10.7 percent of the firms indicated an increase in employment and 0.0 percent of the firms indicated a decrease in employment (89.3 percent indicated no change). Alternatively, an index of 10.7 could have been produced because 50.7 percent of the firms reported an increase, 40 percent reported a decrease, and just 9.3 percent reported no change.

For another example of how to interpret changes in the MBOS diffusion indexes, read how changes were interpreted during the COVID-19 pandemic.

The MBOS’s diffusion index for current general activity correlates well with changes in national economic activity. Index values below zero are typically associated with recessions, and values above zero are typically associated with expansions. However, exceptions do occur, and careful consideration of the broader economic context is always needed.

For example, sharp movements in energy prices can affect activity for several manufacturing sectors. A negative energy price shock may curtail oil production and demand for related heavy equipment and parts — sufficiently widespread to cause the MBOS’s current general activity index to be negative. However, the lower energy prices generally benefit consumers and spur offsetting economic activity in many other sectors.

Another example occurred following the COVID-19 pandemic. During the pandemic, consumers shifted their spending significantly away from services and toward goods — sending the indexes higher for general activity, new orders, shipments, employment, and (critically) backlogs. As consumer demand for goods returned to prepandemic norms, the indexes for general activity, new orders, and backlogs turned very negative — typical of a recession. However, the backlogs were so sufficiently large that employment and shipments remained positive for another year.

Most of our special questions are designed to repeat on an annual, a quarterly, or an irregular basis to create a historical series on measures for which a monthly frequency is not critical and would unnecessarily lengthen the regular survey.

Moreover, the special question section allows the MBOS to be dynamic and responsive to changing economic conditions facing the Third District and the nation by introducing occasional ad hoc questions.

Regularly occurring special questions address topics of economic interest, such as price and inflation expectations (which we report out in a separate release), expected production growth and capacity utilization, and wage and compensation growth. Responses to these recurring questions can be used to study changes in economic conditions over recent quarters or prior years.

We also pose special questions on an ad hoc basis to collect specific data related to unique national or regional economic conditions, such as ones used to better understand impacts of the COVID-19 pandemic or Hurricane Sandy. Special questions can also cover broader topics like the impact of tax policy changes on capital spending.

Yes. We apply monthly seasonal factors to each component (increase, decrease, and no change) of each indicator. We compute the seasonally adjusted diffusion index from the seasonally adjusted components.

In January of each year, we use 50 years of nonseasonally adjusted MBOS data through December of the previous calendar year to calculate revised seasonal adjustment factors, then generate a one-year forecast of new monthly factors to apply in the forthcoming year. This process generates minor revisions to the seasonally adjusted data for prior years, which are released on PhiladelphiaFed.org. These revisions also mean that values found in the historical data files currently available to download will typically differ slightly from values cited in PDF reports from prior years.

Read more about seasonal adjustments and how we handled seasonal adjustments with the atypical volatility at the onset of the COVID-19 pandemic.

The success of the MBOS has spawned similar surveys across the Federal Reserve System, beginning in 1993 at the Federal Reserve Bank of Richmond. The Richmond Fed’s survey uses a composite index and includes quantitative questions for prices paid and received. The manufacturing surveys that the Federal Reserve Banks of New York, Kansas City, and Dallas conduct are similar to the MBOS in that the diffusion indexes can be directly compared. Additionally, the Federal Reserve Bank of Chicago’s Survey of Economic Conditions covers a wide range of industries but includes a subindex for manufacturing.

The Institute for Supply Management’s (ISM) Manufacturing PMI is the most widely followed survey measure of national manufacturing activity. Like the MBOS, it is based on a qualitative survey. For its headline Manufacturing PMI index, the ISM constructs a composite index that comprises five equally weighted indexes: new orders, production, employment, delivery times, and inventories. Unlike the Fed survey indexes, the ISM diffusion indexes represent the share of firms reporting an increase plus one-half of the share reporting no change and is therefore centered around 50.

In 2024, the Federal Reserve Bank of Richmond found that the headline manufacturing indexes from the Federal Reserve Banks of Kansas City, Philadelphia, and Richmond statistically reflected national conditions. Furthermore, only Philadelphia’s headline index improved the forecasting performance of the ISM Manufacturing PMI compared with a baseline model.

For more information on the value of the MBOS as an early indicator, refer to The “Philly Fed Index” Turns 50 with Steadfast Success.