Phila. Fed report Outlook on nonmanufacturing business remains strong

Businesses in the South Jersey area have confidence the economy is improving, according to the latest monthly report by the Federal Reserve in Philadelphia.Businesses in the South Jersey area have confidence the economy is improving, according to the latest monthly report by the Federal Reserve in Philadelphia.

Firms responding to April’s Nonmanufacturing Business Outlook Survey reported that regional nonmanufacturing activity continued to expand, the Fed said. 

According to the survey, the index for current firm-level activity rose slightly, while the indexes for new orders, sales/revenues and employment increased by greater amounts. Both the prices paid and prices received indexes also increased from the prior month. The respondents remained optimistic about activity over the next six months.

Here’s a look at the report’s findings:

New growth: The index for general activity at the firm level edged up from 32.5 in March to 34.9 in April, the Fed reported. This index has been above its historical average of 28.5 for four consecutive months.

Nearly 48 percent of the firms reported increases in activity this month, compared with 13 percent that reported decreases. The regional activity index fell 5 points, to 30.1, but remains above its historical average of 23.0.

New sales: The indicators for new orders and sales/revenues showed improvement, as more firms reported increases in both categories this month compared with last month. The new orders index rose from 22.6 in March to 33.5 in April, its highest reading since February 2015.

The sales/revenues index also improved, rising 14 points, to 34.7. More than 50 percent of the firms indicated higher sales/revenues, up from 36 percent in March, while 15 percent of the firms reported a decrease. 

Employment: The indicators for employment rose in April. The full-time employment index increased 9 points, to 26.4. Almost 31 percent of the firms reported an increase in full-time employment, up 6 points from March. Only 4 percent of the firms reported a decline.

The part-time employment index rose 14 points, to 24.3. The increase in the part-time employment index was largely driven by a rise in the share of firms reporting an increase, from 20 percent in March to 30 percent in April.

The wage and benefit costs indicator rose 17 points to 39.3 in April, as a higher percentage of firms reported increases this month (40 percent) than last month (27 percent). The average workweek index held relatively steady at 20.

The Nonmanufacturing Business Outlook Survey is a monthly survey of nonmanufacturers in the Third Federal Reserve District.

Participants indicate the direction of change in overall business activity and in the various measures of activity at their firms, including new orders, sales or revenues, employment, prices and capital expenditures. Respondents also provide their assessments of general business conditions over the next six months. The survey has been conducted each month since March 2011.