Non-manufacturing activity declined in the region in July, as reported by businesses in the Philadelphia Fed’s Non-Manufacturing Business Outlook Survey. Key indicators such as general activity at the business level, new orders, and sales/earnings turned negative. The full-time employment index also suggests employment declines. Both price indexes indicate continued overall price increases, remaining close to their recession-era averages. Despite the declines, businesses still expect growth over the next six months, but these expectations are not as widespread.
Below is an overview of the data.
- The firm-level current general activity DI turned negative, falling to -10.0 from 15.1 in June, the lowest since April 2023.
- Thirty-one percent of businesses reported a decrease, 21% reported an increase, and 44% reported no change in activity.
- The new orders index fell from 6.7 to -7.1, with 22% of companies reporting a decrease and 15% reporting an increase.
- The Sales/Revenue Index fell 18 points to -3.5, with 25% of companies reporting a decrease and 22% reporting an increase.
- The Local Activity Index fell 22 points to -19.1, its lowest reading since December 2020.
Employment Details:
- Businesses reported a decline in full-time employment, with the full-time employment index falling 20 points to -4.9, the first negative reading since June 2023.
- Nineteen percent of businesses reported a decrease in full-time employment, 14% reported an increase, and 66% reported no change.
- The part-time employment index fell from 13.1 to 4.0.
- 63% of businesses reported that part-time employment remained stable, 15% reported an increase, and 11% reported a decrease.
Pricing details vary, with prices paid being high but prices received being low.
- Price indicators suggest that input prices and the prices of the firms’ own goods and services are continuing to rise.
- Both price indexes were close to their long-term averages.
- The price paid index rose 6 points to 30.2.
- Thirty-two percent of respondents reported an increase in input prices, 2% reported a decrease, and 59% reported no change.
- The received price index fell from 16.6 to 13.9.
- 23% of businesses reported that they had increased their prices, 9% reported that they had decreased their prices, and 59% reported no change.
Featured Question of the MonthCompanies were asked about changes in wages and compensation over the past three months, as well as expected changes in various input and labour costs for 2024.
- About 30% of companies reported an increase in wages and compensation over the past three months, while 68% reported no change and 2% reported a decrease.
- Sixty percent of businesses reported they have not adjusted their 2024 wage and compensation budgets since the beginning of the year.
- 18% of companies plan to increase wages and compensation above their original plans.
- 16% of companies plan to increase wages and compensation sooner than originally planned.
- Companies expect costs to rise in 2024 across most expense items.
- The median expected growth rate was in line with or slightly lower than expectations when respondents were last asked in April..
- Businesses expect costs for wages, intermediate goods and non-health benefits to increase slightly less than in April.
- The median expected increase in total compensation (wages and benefits) costs remained at 4-5%.