The numbers: The Philadelphia Federal Reserve’s business activity index jumped to 51.8 in March from 23.1 in the prior month. That’s the highest reading since 1973. Economists surveyed by the the Wall Street Journal expected the index to slip to 22. Any reading above zero indicated expansion in the manufacturing sector.
What happened: The Philly Fed index is based on a single stand-alone question about business conditions unlike other surveys like the national Institute for Supply Management manufacturing index, which are composites based on components.
This month, the subcomponents of the Philly Fed idex also had strong gains.
The barometer on new orders rose to 50.9 in March from 23.4 in the prior month. The shipments index rose to 30.2 from 21.5 in February.
The employment index improved for the third straight month.
The measure gauging the six-month outlook soared to 61.6 from 39.5 in the prior month.
The prices paid index rose sharply to 75.9 in March from 54.4 in the prior month. That’s the highest reading since March 1980. The prices-received index rose 15 points to 31.8.
Manufacturers complained of worker shortages, saying there was a mismatch between what was required for employment and the workers who were applying for positions.
Big picture: An eye-popping result and much stronger than the similar index released by the New York Fed that hit an eight-month high of 17.4 in March. Economists use the New York and Philadelphia regional indexes to gauge the strength of the national ISM manufacturing index, which expanded last month at the fastest pace since the pandemic struck one year ago. The manufacturing sector is humming. Prices are rising.
What are they saying? “Overall, manufacturing is moving closer to pre-pandemic levels, driven by strong demand for goods, although ongoing supply chain bottlenecks remain a headwind,” said Rubeela Farooqui, chief U.S. economist at High Frequency Economics.
Market reaction: Stocks DJIA,