Philadelphia Fed Survey

Growth is still very strong in the Philly Fed manufacturing region but just not as strong as November’s great surge. The Philly Fed’s general conditions index slowed to 24.5 from 40.8 in November. Outside of November, the latest reading is the strongest since March 2011.

But details in the report do show across-the-board slowing including for new orders, at 15.7 vs November’s 35.7, unfilled orders at 1.5 vs 7.1, employment at 7.2 vs 22.4, and shipments, at 16.1 vs November’s 31.9. It was this 31.9 reading that first signaled what proved to be a great month for manufacturers based on Monday’s November industrial production report where the manufacturing component surged 1.1 percent.

But November looks to be an impossible comparison for the manufacturing sector this month though the rate of growth is still very strong. Other details in today’s report include steady and muted readings for prices and a steady reading for inventories. The 6-month outlook remains very strong though once again less strong than November, at 51.9 vs 57.7.

Today’s report follows Monday’s contractionary reading in the Empire State report and Tuesday’s slowing in the PMI manufacturing flash, a report that offered very similar indications to this report. Watch tomorrow for the manufacturing report from the Kansas City Fed.

PMI Services Flash
Markit’s sample of US service providers reports abrupt slowing in growth so far in December, to 53.6 vs 56.2 in the final November reading and 56.3 in the mid-month November reading. December’s flash is the lowest reading since the heavy weather of February.

Growth in this sample peaked in June and has been slowing the past 6 months, underscored by further moderation this month in new business. The rise in backlog work is the slowest in 5 months. Markit’s sample is still hiring though job creation is the weakest in 8 months. Price pressures are muted reflecting lower fuel-related costs for inputs and lack of pricing power for prices charged.

Today’s report points to tangible slowing for the bulk of the economy going into year end, and it follows weak indications so far this month from the manufacturing economy posted on Monday by the Empire State report and on Tuesday by Markit’s manufacturing sample.