December 2021 Note: Survey responses were collected from December 6 to December 13. Manufacturing growth in the region continued but was less widespread, according to the firms responding to the December Manufacturing Business Outlook Survey. The survey's indicators for general activity, shipments, and new orders all declined to their lowest readings in 2021 but remained positive this month. However, the employment index improved somewhat. Both price indexes declined but remained elevated. The survey's future general activity and new orders indexes moderated, but the surveyed firms remained generally optimistic about growth over the next six months. Current Indicators Soften The diffusion index for current general activity fell 24 points to 15.4 this month. Nearly 27 percent of the firms reported increases (down from 42 percent last month) in current activity this month, while 11 percent reported decreases (up from 3 percent). The current shipments index decreased 17 points, to 15.3, in December. Over 28 percent of the firms reported increases in shipments this month, while 13 percent reported decreases. The index for new orders fell 34 points to a reading of 13.7 after two consecutive months of increases. Nearly 29 percent of the firms reported increases in new orders this month (down from 48 percent last month), while 15 percent reported decreases (up from 0 percent last month). On balance, the firms continued to report increases in employment, and the employment index rose from 27.2 in November to 33.9 this month. The majority of responding firms (56 percent) reported steady employment levels, and the share reporting increases (39 percent) exceeded the share reporting decreases (5 percent). The average workweek index was essentially unchanged at 30.4. Price Increases Remain Widespread The indicators for prices paid and prices received remained elevated but posted declines this month. The prices paid index declined 14 points to 66.1. The percentage of firms reporting increases in input prices (68 percent) far exceeded the percentage reporting decreases (2 percent); 27 percent of the firms reported no change. The current prices received index fell 13 points to 50.4. Nearly 51 percent of the firms reported increases in prices received for their own goods this month, none reported decreases, and 49 percent reported no change. Firms Report Higher Production and Capacity Utilization In this month's special questions, the firms were asked to estimate their total production growth for the fourth quarter ending this month compared with the third quarter of 2021 (see Special Questions). The share of firms reporting expected increases in fourth-quarter production (50 percent) was greater than the share reporting decreases (27 percent). The firms were also asked about their current capacity utilization rate as well as their utilization rate one year ago. The median current capacity utilization rate reported among the responding firms was 80 to 90 percent, higher than the median rate of 70 to 80 percent reported for one year ago. Most firms reported supply chain (90 percent) and labor (76 percent) issues as factors constraining current capacity utilization. Future Indicators Remain Positive The diffusion index for future general activity fell 10 points to 19.0, its lowest reading since February 2016. Thirty-eight percent of the firms expect increases (down from 45 percent last month) in future activity this month, while 19 percent reported decreases (up from 17 percent). The future new orders index declined 4 points, while the future shipments index declined 8 points. The firms continued to expect overall increases in employment over the next six months, with the future employment index rising 7 points to 56.6. Nearly 57 percent of the firms expect to increase employment in their manufacturing plants over the next six months; none anticipate employment declines. Summary Responses to the December Manufacturing Business Outlook Survey suggest less widespread expansion in regional manufacturing conditions this month. The indicators for current activity, shipments, and new orders all fell from their November readings. The price indexes remain elevated and continue to suggest widespread increases in prices. Most of the survey’s future indexes moderated this month but indicated that respondents continue to expect overall growth over the next six months. Special Questions (December 2021) 1. How will your firm’s total production for the fourth quarter of 2021 compare with that of the third quarter? % of firms An increase of: 10% or more 10.4 5-10% 22.9 0-5% 16.7 Subtotal 50.0 No change 22.9 A decline of: 0-5% 16.7 5-10% 4.2 10% or more 6.3 Subtotal 27.1 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2021:Q4) compared with a year ago (2020:Q4)? 2021:Q4 2020:Q4 % of reporters % of reporters Capacity Utilization Rate Less than 30% 0.0 2.2 30-40% 4.3 0.0 40-50% 2.2 2.2 50-60% 2.2 6.7 60-70% 15.2 17.8 70-80% 19.6 28.9 80-90% 28.3 26.7 90-100% 28.3 15.6 Median Utilization Rate 80-90 70-80 3. Have any of the factors below acted as constraints on capacity utilization this quarter?* % of reporters Labor issues 75.5 Supply chain issues 89.8 COVID-19 mitigation measures 28.6 (e.g., reduced operations, distancing) Other factors 10.2 *Percentages will not add to 100 because more than one action could be selected. December 2021 December vs. November Six Months from Now vs. December Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 39.0 26.8 59.1 11.4 15.4 28.5 38.0 35.6 19.0 19.0 Conditions New Orders 47.4 28.9 55.3 15.2 13.7 28.0 40.1 37.3 15.8 24.2 Shipments 32.1 28.1 57.5 12.8 15.3 39.8 47.3 30.7 15.3 32.0 Unfilled Orders 27.4 24.6 61.9 13.2 11.4 -0.8 14.9 59.2 20.9 -6.0 Delivery Times 35.7 37.0 57.4 5.6 31.4 -1.6 26.5 48.5 19.8 6.8 Inventories 13.5 32.2 45.6 19.0 13.2 14.1 31.5 41.0 19.5 12.0 Prices Paid 80.0 68.3 27.3 2.3 66.1 63.9 62.4 23.6 8.6 53.8 Prices Received 62.9 50.7 49.0 0.3 50.4 59.4 59.5 30.2 4.6 54.9 Number of Emp. 27.2 39.0 55.8 5.2 33.9 49.3 56.8 38.6 0.2 56.6 Avg. Emp. Wrkwk. 30.6 30.4 69.5 0.0 30.4 9.7 14.9 71.5 8.4 6.5 Capital Ex. -- -- -- -- -- 31.1 30.1 52.6 10.1 20.0 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through December 13, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: December 16, 2021, at 8:30 a.m. ET. November 2021 Note: Survey responses were collected from November 8 to November 15. Manufacturing activity in the region continued to grow, according to the firms responding to the November Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, shipments, and new orders all rose from October's readings. The employment index declined but remained elevated, and price indexes indicate more widespread price increases. The future indexes continue to indicate that the firms expect growth over the next six months. Current Indicators Are Elevated The diffusion index for current activity increased 15 points to 39.0 in November, its highest reading since April. Nearly 42 percent of the firms reported increases (up from 40 percent last month) in current activity this month, while 3 percent reported decreases (down from 17 percent). The index for new orders increased 17 points to a reading of 47.4. Nearly 48 percent of the firms reported increases in new orders this month, while less than 1 percent reported decreases. The current shipments index rose 2 points to 32.1 in November. On balance, the firms reported increases in manufacturing employment, but the current employment index decreased 4 points to 27.2. Over 31 percent of the firms reported higher employment, 4 percent reported lower employment, and 64 percent reported no change. The average workweek index rose 3 points to 30.6. Price Indexes Near Long-Term Highs The firms continued to report increases in prices for inputs and their own goods. The prices paid diffusion index rose 10 points to 80.0, its highest reading since June’s 42-year high of 80.7. Over 82 percent of the firms reported increases in input prices, while 2 percent reported decreases. The current prices received index increased 12 points to 62.9, its highest reading since June 1974. Nearly 66 percent of the firms reported increases in prices of their own manufactured goods (up from 58 percent in October), while 3 percent reported decreases (down from 7 percent); 32 percent of the firms reported stable output prices. Firms Expect Own Price Increases to Exceed Inflation Rate In this month's special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms' median forecast was for an increase of 5.3 percent, up from 5.0 percent when the question was last asked in August. The firms' actual price change over the past year was 5.0 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 4.8 percent over the next four quarters, an increase from 4.0 percent in August. When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was 5.0 percent, the same as in August. The firms' median forecast for the long-run (10-year average) inflation rate was 3.5 percent, an increase from 3.0 percent in August. Firms Anticipate Continued Growth The respondents continue to expect growth over the next six months. The diffusion index for future general activity increased 4 points to 28.5 in November. Over 45 percent of the firms expect growth over the next six months, while 17 percent expect a decrease in activity. The future new orders index rose 2 points to 28.0, and the future shipments index rose 9 points to 39.8 this month. The future employment index increased 12 points to 49.3. Over 51 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with only 2 percent that anticipate employment declines. Summary Responses to the November Manufacturing Business Outlook Survey suggest continued expansion for the region's manufacturing sector. The indicators for current activity, shipments, and new orders all increased from last month. Additionally, the firms indicated overall increases in employment and more widespread increases in prices paid and received. The survey's future indexes continue to suggest expected growth over the next six months. Special Questions (November 2021) Please list the annual percent change with respect to the following: Current Previous (August 2021) For your firm: Forecast for next year (2021Q4-2022Q4) 1. Prices your firm will receive (for its own goods and services sold). 5.3 5.0 2. Compensation your firm will pay per employee (for wages and benefits). 4.8 4.0 Last year's price change (2020Q4-2021Q4) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 5.0 3.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 5.0 5.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2021-2030). 3.5 3.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. November 2021 November vs. October Six Months from Now vs. November Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 23.8 41.8 55.4 2.8 39.0 24.2 45.2 32.4 16.7 28.5 Conditions New Orders 30.8 47.7 52.0 0.3 47.4 26.2 46.6 29.6 18.6 28.0 Shipments 30.0 38.3 55.6 6.2 32.1 30.5 55.1 26.8 15.3 39.8 Unfilled Orders 12.7 37.0 53.3 9.6 27.4 -18.1 25.5 42.2 26.3 -0.8 Delivery Times 32.2 40.0 55.6 4.4 35.7 -1.7 19.5 56.4 21.0 -1.6 Inventories 18.8 26.1 60.2 12.6 13.5 23.6 25.9 57.2 11.8 14.1 Prices Paid 70.3 82.1 15.5 2.1 80.0 64.1 68.1 20.0 4.3 63.9 Prices Received 51.1 65.5 31.9 2.6 62.9 58.8 63.6 31.8 4.2 59.4 Number of Emp. 30.7 31.4 63.7 4.2 27.2 37.5 51.4 43.4 2.1 49.3 Avg. Emp. Wrkwk. 27.8 33.1 64.4 2.5 30.6 27.2 16.7 72.8 7.1 9.7 Capital Ex. -- -- -- -- -- 32.4 38.6 51.2 7.6 31.1 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through November 15, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: November 18, 2021, at 8:30 a.m. ET. October 2021 Note: Survey responses were collected from October 12 to October 18. Manufacturing activity in the region continued to expand this month, according to the firms responding to the October Manufacturing Business Outlook Survey. The survey's indicator for general activity declined, the new orders index improved, and the shipments index held steady. Both price indexes remained elevated. The survey’s future indexes suggest that the surveyed firms remained generally optimistic about growth over the next six months. Current Indicators Remain Positive The diffusion index for current general activity fell 7 points to 23.8 this month. More than 40 percent of the firms reported increases in general activity this month (up from 34 percent last month), while 17 percent reported decreases (up from 3 percent). The current shipments index was essentially unchanged at 30.0 in October. The index for new orders rose 15 points to a reading of 30.8. Over 47 percent of the firms reported increases in new orders this month, while 16 percent reported decreases. The firms continued to report increases in employment on balance, with the employment index rising from 26.3 in September to 30.7 this month. The majority of responding firms (65 percent) reported steady employment levels, and the share reporting increases (31 percent) exceeded the share reporting decreases (1 percent). The average workweek index fell 2 points to 27.8. Price Indicators Remain Elevated The indicators for prices paid and prices received remained elevated this month. The prices paid index rose 3 points to 70.3. The percentage of firms reporting increases in input prices (73 percent) far exceeded the percentage reporting decreases (3 percent); 22 percent of the firms reported no change. The current prices received index edged down 2 points to 51.1. Over 58 percent of the firms reported increases in prices received for their own goods this month, 7 percent reported decreases, and 34 percent reported no change. Firms Anticipate Higher Capital Expenditures Next Year For this month's special questions, manufacturers were asked about their plans for different categories of capital spending next year (see Special Question). For five out of six categories of investment spending (software, noncomputer equipment, computer equipment, energy-saving investments, and other), the share of firms expecting to increase spending was higher than the share of firms expecting to decrease spending. On balance, the firms expect larger increases for software and noncomputer equipment and a small net decrease in capital expenditures on structure next year. Firms Remain Optimistic About Growth The diffusion index for future general activity rose 4 points to 24.2. The share of firms expecting increases in activity over the next six months (47 percent) exceeded the share expecting decreases (23 percent). The future new orders index declined 6 points, while the future shipments index fell 11 points. The firms continued to expect overall increases in employment over the next six months, with the future employment index ticking down 1 point to 37.5. Over 45 percent of the firms expect to increase employment in their manufacturing plants over the next six months; only 8 percent anticipate employment declines. Summary Responses to the October Manufacturing Business Outlook Survey suggest continued expansion in regional manufacturing conditions this month. The indicator for current activity fell from its September reading, while the new orders index rose and the shipments index remained stable. The price indexes remain elevated and continue to suggest widespread increases in prices. The survey's future indexes indicate that respondents continue to expect growth over the next six months. Special Question (October 2021) Comparing 2022 with 2021, do you expect capital expenditures to be higher, the same, or lower for each of the following categories? Higher Same Lower Diffusion --------(% of reporters)------- Index Software 37.5 52.1 10.4 27.1 Noncomputer equipment 50.0 37.5 12.5 37.5 Energy-saving investments 20.8 66.7 12.5 8.3 Computer and related hardware 29.2 60.4 10.4 18.8 Structure 25.0 45.8 29.2 -4.2 Other 18.2 72.7 9.1 9.1 Total capital spending 53.2 31.9 14.9 38.3 October 2021 October vs. September Six Months from Now vs. October Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 30.7 40.3 41.2 16.5 23.8 20.0 46.9 20.9 22.7 24.2 Conditions New Orders 15.9 47.1 36.6 16.3 30.8 32.1 42.4 37.2 16.1 26.2 Shipments 29.9 43.3 41.9 13.3 30.0 41.6 50.9 24.2 20.5 30.5 Unfilled Orders 5.4 30.1 51.7 17.4 12.7 -10.0 13.8 50.9 31.9 -18.1 Delivery Times 20.4 41.6 49.0 9.4 32.2 7.8 20.7 52.0 22.3 -1.7 Inventories 19.2 30.9 54.5 12.0 18.8 14.4 37.2 44.3 13.6 23.6 Prices Paid 67.3 73.3 21.9 3.0 70.3 53.5 65.3 28.1 1.2 64.1 Prices Received 52.9 58.4 33.5 7.3 51.1 62.2 58.8 38.4 0.0 58.8 Number of Emp. 26.3 31.2 65.4 0.5 30.7 38.6 45.1 42.0 7.6 37.5 Avg. Emp. Wrkwk. 29.3 33.4 61.1 5.6 27.8 15.4 35.1 52.8 7.9 27.2 Capital Ex. -- -- -- -- -- 23.6 37.6 52.3 5.2 32.4 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through October 18, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: October 21, 2021, at 8:30 a.m. ET. September 2021 Note: Survey responses were collected from September 7 to September 13. Manufacturing activity in the region continued to expand this month, according to the firms responding to the September Manufacturing Business Outlook Survey. The survey’s indicators for general activity and shipments improved, but the new orders and employment indexes softened somewhat. Both price indexes remained elevated. The survey’s future general activity and new orders indexes continued to moderate, but the surveyed firms remained generally optimistic about growth over the next six months. Current Indicators Remain Elevated The diffusion index for current general activity rose 11 points to 30.7 this month. The current shipments index also rose 11 points, to 29.9 in September. More than 34 percent of the firms reported increases in shipments this month, while only 4 percent reported decreases. The index for new orders fell 7 points to a reading of 15.9. Nearly 31 percent of the firms reported increases in new orders this month, while 15 percent reported decreases. On balance, the firms continued to report increases in employment, but the employment index declined from 32.6 in August to 26.3 this month. The majority of responding firms (62 percent) reported steady employment levels, and the share reporting increases (31 percent) exceeded the share reporting decreases (5 percent). The average workweek index climbed 5 points to 29.3. Price Increases Remain Widespread The indicators for prices paid and prices received remained elevated but posted small declines this month. The prices paid index declined 4 points to 67.3. The percentage of firms reporting increases in input prices (71 percent) far exceeded the percentage reporting decreases (4 percent); 23 percent of the firms reported no change. The current prices received index ticked down 1 point to 52.9. Nearly 55 percent of the firms reported increases in prices received for their own goods this month, 2 percent reported decreases, and 42 percent reported no change. Firms Report Higher Production and Capacity Utilization In this month’s special questions, the firms were asked to estimate their total production growth for the third quarter ending this month compared with the second quarter of 2021 (see Special Questions). The share of firms reporting expected increases in third-quarter production (70 percent) was greater than the share reporting decreases (18 percent), with a median response of an increase of 0 to 5 percent. The firms were also asked about their current capacity utilization rate as well as their utilization rate one year ago. The median current capacity utilization rate reported among the responding firms was 70 to 80 percent, higher than the median rate of 60 to 70 percent reported for one year ago. Most firms reported supply chain (87 percent) and labor (74 percent) issues as factors constraining current capacity utilization. Firms Remain Optimistic About Growth The diffusion index for future general activity decreased for the third consecutive month, falling 14 points to 20.0. The share of firms expecting increases in activity over the next six months (33 percent) exceeded the share expecting decreases (13 percent); a majority (41 percent) expect no change. The future new orders index declined 6 points, while the future shipments index inched up nearly 1 point. The firms continued to expect overall increases in employment over the next six months, although the future employment index declined 4 points to 38.6. Over 44 percent of the firms expect to increase employment in their manufacturing plants over the next six months; only 6 percent anticipate employment declines. Summary Responses to the September Manufacturing Business Outlook Survey suggest continued expansion in regional manufacturing conditions this month. The indicators for current activity and shipments rose from their August readings. The price indexes remain elevated and continue to suggest widespread increases in prices. The survey’s future indexes indicate that respondents continue to expect growth over the next six months, although the future general activity and new orders indexes continued to trend lower. Special Questions (September 2021) 1. How will your firm’s total production for the third quarter of 2021 compare with that of the second quarter? % of firms An increase of: 20% or more 7.5 15-20% 2.5 10-15% 7.5 5-10% 30.0 0-5% 22.5 Subtotal 70.0 No change 12.5 A decline of: 0-5% 7.5 5-10% 2.5 10% or more 7.5 Subtotal 17.5 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2021:Q3) compared with a year ago (2020:Q3)? 2021:Q3 2020:Q3 % of reporters % of reporters Capacity Utilization Rate Less than 30% 0.0 2.5 30-40% 5.1 0.0 40-50% 2.6 10.0 50-60% 2.6 12.5 60-70% 15.4 27.5 70-80% 30.8 32.5 80-90% 33.3 15.0 90-100% 10.3 0.0 Median Utilization Rate 70-80 60-70 3. Have any of the factors below acted as constraints on capacity utilization this quarter?* % of reporters Labor issues 74.4 Supply chain issues 87.2 COVID-19 mitigation measures 15.4 (e.g., reduced operations, distancing) Other factors 7.7 *Percentages will not add to 100 because more than one action could be selected. September 2021 September vs. August Six Months from Now vs. September Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 19.4 33.6 60.6 2.9 30.7 33.7 32.5 41.2 12.5 20.0 Conditions New Orders 22.8 30.9 52.1 15.0 15.9 38.0 48.7 33.9 16.6 32.1 Shipments 18.9 34.4 56.3 4.4 29.9 40.8 56.0 26.5 14.3 41.6 Unfilled Orders 7.0 18.9 65.2 13.5 5.4 4.2 18.9 48.8 28.9 -10.0 Delivery Times 26.3 26.7 64.2 6.3 20.4 1.8 24.7 54.4 16.9 7.8 Inventories -18.1 26.0 60.5 6.8 19.2 20.1 26.5 58.5 12.1 14.4 Prices Paid 71.2 71.3 23.0 4.0 67.3 54.6 59.6 27.2 6.1 53.5 Prices Received 53.9 54.8 41.6 1.8 52.9 70.1 62.9 30.9 0.7 62.2 Number of Emp. 32.6 31.2 62.1 4.9 26.3 42.7 44.4 46.4 5.8 38.6 Avg. Emp. Wrkwk. 24.5 29.3 70.0 0.0 29.3 20.8 23.4 65.8 8.0 15.4 Capital Ex. -- -- -- -- -- 33.7 33.3 53.8 9.7 23.6 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through September 13, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: September 16, 2021, at 8:30 a.m. ET. August 2021 Note: Survey responses were collected from August 9 to August 16. Manufacturing activity in the region continued to grow, according to the firms responding to the August Manufacturing Business Outlook Survey. The survey's current indicators for general activity and shipments declined from July's readings but remained elevated, while the new orders indicator rose. Additionally, employment increases were more widespread this month, and both price indexes remained elevated. Most future indexes moderated this month but continue to indicate that the firms expect growth over the next six months. Current Indicators Remain Positive The diffusion index for current activity decreased 3 points to 19.4 in August, its fourth consecutive decline after reaching a long-term high reading in April. Twenty-eight percent of the firms reported increases in current activity this month, while 9 percent reported decreases. The index for new orders increased 6 points to a reading of 22.8, while the current shipments index fell 6 points to 18.9 in August. Nearly 34 percent of the firms reported increases in shipments this month, exceeding the 15 percent that reported decreases. On balance, the firms reported increases in manufacturing employment, and the current employment index increased 3 points to 32.6. Over 39 percent of the firms reported higher employment, 7 percent reported lower employment, and 54 percent reported no change. The average workweek index rose 6 points to 24.5. Price Indexes Remain Elevated The firms continued to report increases in prices for inputs and their own goods. The prices paid diffusion index edged up 2 points to 71.2, after falling 10 points last month from June's 42-year high. Nearly 74 percent of the firms reported increases in input prices, while 3 percent reported decreases. The current prices received index increased 7 points to 53.9, its highest reading since May 1974. Over 56 percent of the firms reported increases in prices of their own manufactured goods, up from 50 percent in July; 40 percent of the firms reported stable output prices. Firms Expect Own Price Increases to Match Inflation Rate In this month's special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms' median forecast was for an increase of 5.0 percent, the same as when the question was last asked in May. The firms' actual price change over the past year was 3.0 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 4.0 percent over the next four quarters, the same as in May. When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was 5.0 percent, an increase from 4.0 percent in May. The firms' median forecast for the long-run (10-year average) inflation rate was 3.0 percent, the same as in May. Firms' Outlook Softens, but Continued Growth Is Expected The respondents continue to expect growth over the next six months, although most of the survey's future indexes declined. The diffusion index for future general activity decreased 15 points to 33.7 in August, its second consecutive decline after reaching a 30-year high in June. Nearly 46 percent of the firms expect growth over the next six months, down from 59 percent last month; 12 percent expect a decrease in activity. The future new orders index decreased 7 points to 38.0, and the future shipments index fell 25 points to 40.8 this month. The future employment index remained elevated but fell 14 points to 42.7. Over 48 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with only 6 percent that anticipate employment declines. Summary Responses to the August Manufacturing Business Outlook Survey suggest continued expansion for the region's manufacturing sector. The indicators for current activity and shipments decreased from last month but remained elevated. Additionally, the firms reported increases in new orders and employment. The survey's future indexes moderated this month but continue to suggest expected growth over the next six months. Special Questions (August 2021) Please list the annual percent change with respect to the following: Current Previous (May 2021) For your firm: Forecast for next year (2021Q3-2022Q3) 1. Prices your firm will receive (for its own goods and services sold). 5.0 5.0 2. Compensation your firm will pay per employee (for wages and benefits). 4.0 4.0 Last year's price change (2020Q3-2021Q3) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 3.0 2.3 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 5.0 4.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2021-2030). 3.0 3.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. August 2021 August vs. July Six Months from Now vs. August Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 21.9 28.0 59.3 8.5 19.4 48.6 45.5 34.6 11.8 33.7 Conditions New Orders 17.0 34.4 52.5 11.6 22.8 45.3 52.5 28.9 14.6 38.0 Shipments 24.6 33.9 50.3 15.0 18.9 65.6 56.1 25.8 15.3 40.8 Unfilled Orders 19.0 28.2 49.7 21.1 7.0 6.7 23.4 52.3 19.2 4.2 Delivery Times 33.3 33.7 57.0 7.4 26.3 -10.4 24.2 47.3 22.4 1.8 Inventories -4.0 11.2 55.0 29.3 -18.1 12.6 39.4 34.6 19.3 20.1 Prices Paid 69.7 73.8 19.9 2.6 71.2 63.0 65.2 17.2 10.6 54.6 Prices Received 46.8 56.4 39.5 2.5 53.9 56.5 75.2 14.8 5.1 70.1 Number of Emp. 29.2 39.4 53.8 6.8 32.6 56.6 48.2 45.1 5.5 42.7 Avg. Emp. Wrkwk. 18.4 25.0 70.5 0.5 24.5 27.0 29.7 58.6 8.9 20.8 Capital Ex. -- -- -- -- -- 41.2 39.0 48.0 5.3 33.7 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through August 16, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: August 19, 2021, at 8:30 a.m. ET. July 2021 Note: Survey responses were collected from July 6 to July 12. Manufacturing activity in the region continued to expand this month, according to firms responding to the July Manufacturing Business Outlook Survey. The indicators for general activity, shipments, and new orders all declined but remain elevated. The firms continued to report increases in employment and prices. Most of the survey's future indexes tempered but continue to indicate overall optimism about growth over the next six months. Current Indicators Remain Elevated The diffusion index for current manufacturing activity fell from a reading of 30.7 in June to 21.9 this month. Thirty-three percent of the firms reported increases in current activity this month, while only 11 percent reported decreases. The majority of firms (51 percent) reported no change in current activity. The current new orders index decreased 5 points to 17.0 in July, while the current shipments index fell 3 points to 24.6. The firms continued to add to their payrolls this month. The current employment index edged down from a reading of 30.7 in June to 29.2 this month. Over 38 percent of the responding firms reported increases in employment, while only 9 percent of the firms reported decreases. The current workweek index fell 2 points to 18.4. Price Indexes Suggest Increasing Prices The firms continued to report price pressures; however, both price indexes declined this month. The prices paid index decreased 11 points to 69.7 in July after reaching a 42-year high in June. Over 72 percent of the firms reported higher input prices this month (down from 82 percent last month), while only 2 percent of the firms reported lower input prices (up from 1 percent). The firms also reported overall increases in prices for their own manufactured goods: The prices received index decreased 3 points to 46.8. Firms Remain Optimistic About Growth The diffusion index for future general activity fell 21 points from a near 30-year high reading in June to 48.6 this month. Nearly 59 percent of the firms expect increases in activity over the next six months, while 10 percent expect declines. The future new orders and shipments indexes also decreased, falling 23 points and 6 points, respectively. The future employment index rose 3 points to 56.6. Nearly 63 percent of the firms expect to increase employment over the next six months, whereas only 6 percent of the firms expect to decrease employment. The future capital spending index edged up 1 point to 41.2. Firms Report Increases in Wages and Compensation In special questions this month, the firms were asked generally about changes in wages and compensation over the past three months, how these recent or planned changes will affect their budgets for the rest of the year, and the components of these changes (see Special Questions). Nearly 74 percent of the firms indicated increases in wages and compensation costs over the past three months, 26 percent reported no change, and none reported decreases. The majority of the firms have reported adjusting their 2021 budgets for wages and compensation since the beginning of the year, with 57 percent indicating they are planning to increase wages and compensation by more than originally planned and 36 percent indicating they are planning to increase wages and compensation sooner than originally planned. Based on the median reporter, the firms expect wages to increase by 4 to 5 percent and total compensation to increase by 4 to 5 percent in 2021. Summary The firms' responses continued to suggest ongoing growth in the region's manufacturing sector this month. The survey's indicators for general activity, new orders, and shipments remain elevated but declined. The firms also continued to report increases in prices. The survey's future indexes indicate that the firms remain optimistic about growth over the next six months. Special Questions (July 2021) 1. How have wages and compensation changed at your firm over the past three months? Percent (%) Increased 73.6 No Change 26.4 Decreased 0.0 2. Since the beginning of the year, have you adjusted your budget for wages and compensation for 2021?* Yes, and we are planning to increase wages and compensation by more than originally planned. 56.6 Yes, and we are planning to increase wages and compensation sooner than originally planned. 35.8 No, we have not needed to make adjustments. 20.8 Other 1.9 *Percentages do not sum to 100 because more than one option could be selected. 3. What percentage change in costs do you now expect for the following categories over all of 2021?** Wages Health Nonhealth Wages + (%) Benefits Benefits Health + (%) (%) Nonhealth (%) Decline of 3% or more 0.0 2.0 0.0 4.1 Decline of 2-3% 0.0 0.0 0.0 0.0 Decline of 1-2% 0.0 0.0 0.0 0.0 No Change 1.9 31.4 32.7 2.0 Increase of 1-2% 7.7 5.9 12.2 6.1 Increase of 2-3% 17.3 5.9 20.4 6.1 Increase of 3-4% 21.2 21.6 16.3 24.5 Increase of 4-5% 19.2 2.0 14.3 16.3 Increase of 5-7.5% 21.2 3.9 2.0 16.3 Increase of 7.5-10% 1.9 13.7 2.0 8.2 Increase of 10% or more 9.6 13.7 0.0 16.3 ------------------- ------------------------------------------- Median Expected Change 4-5% 3-4% 2-3% 4-5% **Percentages may not sum to 100 because of rounding. Summary of Returns July 2021 July vs. June Six Months from Now vs. July Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 30.7 33.0 51.4 11.2 21.9 69.2 58.9 25.9 10.3 48.6 Conditions New Orders 22.2 32.7 51.4 15.7 17.0 68.4 61.1 20.6 15.8 45.3 Shipments 27.2 35.7 53.0 11.1 24.6 71.9 72.8 15.9 7.1 65.6 Unfilled Orders 22.5 24.1 69.5 5.0 19.0 19.2 24.1 54.0 17.5 6.7 Delivery Times 29.3 35.9 59.7 2.5 33.3 20.6 19.5 46.3 29.9 -10.4 Inventories 17.9 8.5 71.0 12.5 -4.0 9.8 33.3 46.0 20.7 12.6 Prices Paid 80.7 72.1 24.9 2.4 69.7 71.1 71.2 18.1 8.2 63.0 Prices Received 49.7 49.7 47.5 2.9 46.8 67.8 64.7 24.9 8.1 56.5 Number of Emp. 30.7 38.1 52.9 8.9 29.2 54.0 62.7 29.4 6.0 56.6 Avg. Emp. Wrkwk. 20.1 29.1 60.2 10.7 18.4 21.6 30.1 64.0 3.2 27.0 Capital Ex. -- -- -- -- -- 40.4 45.6 49.5 4.4 41.2 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through July 12, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: July 15, 2021, at 8:30 a.m. ET. June 2021 Note: Survey responses were collected from June 7 to June 14. Manufacturing activity in the region continued to grow, according to the firms responding to the June Manufacturing Business Outlook Survey. The survey's indicators for general activity, new orders, and shipments remained elevated, although movements were mixed. Additionally, the employment index increased, while the price indexes climbed above last month's long-term highs. Most future indicators improved, suggesting that more firms expect overall growth over the next six months. Current Indicators Remain Elevated The diffusion index for current general activity edged down 1 point to 30.7 this month. The index for new orders decreased 10 points to a reading of 22.2. Over 36 percent of the firms reported increases in new orders this month (down from 44 percent last month), while 14 percent reported decreases (up from 11 percent). The current shipments index rose 6 points to 27.2 in June. Over 41 percent of the firms reported increases in shipments this month, while 14 percent reported decreases. On balance, the firms continued to report increases in employment, as the employment index increased 11 points, recovering its losses from last month. The majority of responding firms (52 percent) reported steady employment levels, and the share reporting increases (39 percent) exceeded the share reporting decreases (8 percent). Price Increases Remain Widespread The prices paid diffusion index rose for the second consecutive month, 4 points to 80.7, its highest reading since June 1979. The percentage of firms reporting increases in input prices (82 percent) was higher than the percentage reporting decreases (1 percent). The current prices received index rose for the fourth consecutive month, moving up 9 points to 49.7, its highest reading since October 1980. Over 51 percent of the firms reported increases in prices received this month (up from 43 percent last month), while only 2 percent reported decreases (the same as last month). Firms Report Higher Production and Capacity Utilization In this month's special questions, the firms were asked to estimate their total production growth for the second quarter ending this month compared with the first quarter of 2021 (see Special Questions). The share of firms reporting expected increases in second-quarter production (59 percent) was greater than the share reporting decreases (24 percent), and the median response was an increase of 0 to 5 percent. The firms were also asked about their current capacity utilization rate as well as their utilization rate one year ago. The median current capacity utilization rate reported among the responding firms was 70 to 80 percent, higher than the median rate of 60 to 70 percent reported for one year ago. A majority of firms reported labor supply (69 percent) and supply chain issues (80 percent) constraining current capacity utilization. Firms Remain Optimistic About Growth The diffusion index for future general activity increased 17 points from its May reading, reaching 69.2, its highest level in nearly 30 years. Over 75 percent of the firms expect increases in activity over the next six months, while 6 percent expect declines. The future shipments and new orders indexes also improved, increasing 15 points and 18 points, respectively. The future employment index rose 2 points to 54.0. Over 59 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with only 5 percent that anticipate employment declines. Summary Responses to the June Manufacturing Business Outlook Survey suggest continued expansion in regional manufacturing conditions this month. The indicators for current activity, new orders, and shipments remain elevated. Additionally, both price indexes reached long-term highs. The survey's future indexes indicate that respondents expect growth over the remainder of the year. Special Questions (June 2021) 1. How will your firm’s total production for the second quarter of 2021 compare with that of the first quarter? % of firms An increase of: 20% or more 6.9 15–20% 1.7 10–15% 6.9 5–10% 27.6 0–5% 15.5 Subtotal 58.6 No change 17.2 A decline of: 0–5% 6.9 5–10% 6.9 10% or more 10.3 Subtotal 24.1 2. Which of the following best characterizes your plant's percentage capacity utilization currently (2021:Q2) compared with a year ago (2020:Q2)? 2021:Q2 2020:Q2 % of reporters % of reporters Capacity Utilization Rate Less than 30% 3.4 3.6 30–40% 3.4 10.9 40–50% 1.7 10.9 50–60% 1.7 7.3 60–70% 22.4 21.8 70–80% 20.7 21.8 80–90% 31.0 18.2 90–100% 15.5 5.5 Median Utilization Rate 70–80 60–70 3. Have any of the factors below acted as constraints on capacity utilization this quarter?* % of reporters Labor issues 69.2 Supply chain issues 79.5 COVID-19 mitigation measures 17.9 (e.g., reduced operations, distancing) Other factors 17.9 *Percentages will not add to 100 because more than one action could be selected. June 2021 June vs. May Six Months from Now vs. June Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 31.5 41.6 47.5 10.9 30.7 52.7 75.4 18.4 6.2 69.2 Conditions New Orders 32.5 36.4 48.6 14.2 22.2 50.3 74.1 20.1 5.7 68.4 Shipments 21.0 41.2 44.7 14.0 27.2 57.4 75.8 20.4 3.9 71.9 Unfilled Orders 40.4 33.4 55.7 10.9 22.5 15.9 35.8 47.7 16.6 19.2 Delivery Times 41.5 39.1 51.0 9.8 29.3 -4.0 37.3 43.7 16.7 20.6 Inventories 25.6 32.0 53.9 14.1 17.9 16.9 31.9 46.0 22.1 9.8 Prices Paid 76.8 81.6 17.4 1.0 80.7 66.7 76.5 18.1 5.4 71.1 Prices Received 41.0 51.4 46.1 1.7 49.7 58.4 76.4 15.1 8.5 67.8 Number of Emp. 19.3 38.5 52.4 7.8 30.7 52.1 59.4 35.2 5.4 54.0 Avg. Emp. Wrkwk. 35.5 28.3 63.4 8.2 20.1 23.1 31.9 57.9 10.2 21.6 Capital Ex. -- -- -- -- -- 37.4 44.0 49.7 3.6 40.4 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through June 14, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: June 17, 2021, at 8:30 a.m. ET. May 2021 Note: Survey responses were collected from May 10 to May 17. Manufacturing activity in the region continued to grow, according to the firms responding to the May Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments declined from April's readings but remained elevated. Additionally, employment increases were less widespread this month, while both price indexes reached long-term highs. Most future indexes moderated this month but continue to indicate that the firms expect growth over the next six months. Current Indicators Remain Positive The diffusion index for current activity decreased 19 points to 31.5 in May, after reaching long-term high readings in March and April. Over 43 percent of the firms reported increases in current activity this month (down from 59 percent last month), while 12 percent reported decreases (up from 8 percent). The index for new orders decreased 4 points to a reading of 32.5. The current shipments index fell 4 points to 21.0 in May. Over 42 percent of the firms reported increases in shipments this month, while 21 percent reported decreases. On balance, the firms reported increases in manufacturing employment, but increases were less widespread, as the current employment index decreased 12 points to 19.3. Almost 26 percent of the firms reported higher employment, 6 percent reported lower employment, and 65 percent reported no change. The average workweek index rose 6 points to 35.5. Price Indicators Reach 40-Year Highs Price increases were more widespread this month for the firms' inputs and own goods. The prices paid diffusion index increased 8 points to 76.8, its highest reading since March 1980. Nearly 77 percent of the firms reported increases in input prices, while none reported decreases. The current prices received index increased 7 points to 41.0, its highest reading since May 1981. Nearly 43 percent of the firms reported increases in prices of their own manufactured goods, up from 36 percent in April; most firms (55 percent) reported stable output prices. Firms Expect Own Prices to Rise Faster Than Inflation In this month's special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms' median forecast was for an increase of 5.0 percent, an increase from 3.0 percent when the question was last asked in February. The firms' actual price change over the past year was 2.3 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 4.0 percent over the next four quarters, an increase from 3.0 percent in the previous quarter. When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was 4.0 percent, an increase from 3.0 percent in the previous quarter. The firms' median forecast for the long-run (10-year average) inflation rate was 3.0 percent, the same as in February. Firms Remain Optimistic About Growth The respondents continue to expect growth over the next six months, although most of the survey's future indexes declined. The diffusion index for future general activity decreased 14 points to 52.7 in May after reaching a 20-year high last month. Nearly 57 percent of the firms expect growth over the next six months, down from 71 percent last month. The future new orders index fell 9 points to 50.3, and the future shipments index decreased 6 points to 57.4 this month. The future employment index fell 4 points to 52.1. Nearly 55 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with only 3 percent that anticipate employment declines. Summary Responses to the May Manufacturing Business Outlook Survey suggest continued expansion for the region's manufacturing sector. The indicators for current activity, new orders, and shipments decreased from last month but remained elevated. The survey’s future indexes also moderated this month but continue to suggest expected growth over the next six months. Special Questions (May 2021) Please list the annual percent change with respect to the following: Current Previous (Feb. 2021) For your firm: Forecast for next year (2021Q2-2022Q2) 1. Prices your firm will receive (for its own goods and services sold). 5.0 3.0 2. Compensation your firm will pay per employee (for wages and benefits). 4.0 3.0 Last year's price change (2020Q2-2021Q2) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 2.3 2.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 4.0 3.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2021-2030). 3.0 3.0 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns May 2021 May vs. April Six Months from Now vs. May Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 50.2 43.4 44.6 11.9 31.5 66.6 56.9 35.5 4.3 52.7 Conditions New Orders 36.0 43.5 45.2 11.0 32.5 59.5 55.5 36.6 5.2 50.3 Shipments 25.3 42.3 36.0 21.3 21.0 63.0 64.3 24.9 6.9 57.4 Unfilled Orders 27.2 42.2 55.5 1.8 40.4 4.9 29.5 52.4 13.6 15.9 Delivery Times 27.8 44.6 49.0 3.1 41.5 3.5 22.9 47.7 26.9 -4.0 Inventories 17.3 37.8 44.6 12.2 25.6 21.7 30.2 47.4 13.3 16.9 Prices Paid 69.1 76.8 21.5 0.0 76.8 71.5 74.3 12.7 7.7 66.7 Prices Received 34.5 42.9 54.9 1.9 41.0 63.6 69.8 17.3 11.4 58.4 Number of Emp. 30.8 25.6 65.0 6.3 19.3 55.7 54.9 39.2 2.8 52.1 Avg. Emp. Wrkwk. 29.8 38.9 56.8 3.4 35.5 22.0 28.4 62.0 5.4 23.1 Capital Ex. -- -- -- -- -- 36.7 44.9 41.6 7.5 37.4 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through May 17, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: May 20, 2021 at 8:30 a.m. ET. April 2021 Note: Survey responses were collected from April 5 to April 12. Manufacturing conditions in the region continued to improve this month, according to firms responding to the April Manufacturing Business Outlook Survey. The indicators for general activity, shipments, and employment all rose. The firms continued to report increases in prices. The survey's future indexes indicate continued optimism about growth over the next six months. Current Indicators Remain Elevated The index for current manufacturing activity rose from a revised reading of 44.5 in March to 50.2 this month, its highest point in nearly 50 years.* Nearly 59 percent of the firms reported increases in current activity this month; only 8 percent reported decreases. The current new orders index edged down 2 points to 36.0 in April, while the current shipments index increased 3 points to 25.3. The firms continued to add to their payrolls this month. The current employment index increased from a revised reading of 27.4 in March to 30.8 this month, its highest recorded reading. Over 35 percent of the responding firms reported increases in employment, while only 4 percent of the firms reported decreases. The current workweek index fell 7 points to 29.8. Price Indexes Suggest Increasing Prices The firms continued to report price pressures from purchased inputs. The prices paid index edged down 4 points to 69.1 in April after reaching a 40-year high in March. Over 71 percent of the firms reported higher input prices this month, while only 2 percent of the firms reported lower input prices. The firms also reported overall increases in prices for their own manufactured goods: The prices received index increased 4 points to 34.5. Firms Remain Optimistic About Growth The diffusion index for future general activity rose 8 points to 66.6 this month, its highest reading since October 1991. Seventy-one percent of the firms expect increases in activity over the next six months, while 4 percent expect declines. The future new orders and shipments indexes also increased, rising 11 points and 10 points, respectively. The future employment index rose 9 points to 55.7. Over 56 percent of the firms expect to increase employment over the next six months; hardly any firms expect to decrease employment. The future capital spending index rose 3 points to 36.7. Firms Report Increases in Wages and Compensation In special questions this month, the firms were asked generally about changes in wages and compensation over the past three months, how these recent or planned changes will affect their budget for the rest of the year, and the components of these changes (see Special Questions). Nearly 65 percent of the firms indicated increases in wages and compensation costs over the past three months, 35 percent reported no change, and none reported decreases. Nearly 60 percent of the firms reported adjusting their 2021 budgets for wages and compensation since the beginning of the year, with 39 percent indicating they are planning to increase wages and compensation by more than originally planned and 21 percent of the firms indicating they are planning to increase wages and compensation sooner than originally planned. Based on the median reporter, firms expect wages to increase by 3 to 4 percent and total compensation to increase by 4 to 5 percent in 2021. Summary The firms' responses continued to suggest widespread growth in the region's manufacturing sector this month. The survey's indicators for activity, employment, new orders, and shipments all remain elevated, with the former two indexes reaching long-term highs. The firms also continued to report price pressures. The survey’s future indexes indicate that firms remain optimistic about growth over the next six months. Special Questions (April 2021) 1. How have wages and compensation changed at your firm over the past three months? Percent (%) Increased 64.9 No Change 35.1 Decreased 0.0 2. Since the beginning of the year, have you adjusted your budget for wages and compensation for 2021?** Yes, and we are planning to increase wages and compensation by more than originally planned. 38.6 Yes, and we are planning to increase wages and compensation sooner than originally planned. 21.1 No, we have not needed to make adjustments. 40.4 Other 3.5 **Percentages do not sum to 100 because more than one option could be selected. 3. What percentage change in costs do you now expect for the following categories over all of 2021?*** Wages Health Nonhealth Wages + (%) Benefits Benefits Health + (%) (%) Nonhealth (%) Decline of 3-4% 0.0 1.8 0.0 0.0 Decline of 2-3% 1.8 0.0 0.0 1.8 Decline of 1-2% 1.8 1.8 1.8 3.6 No Change 1.8 25.5 45.5 3.6 Increase of 1-2% 10.5 1.8 25.5 7.1 Increase of 2-3% 31.6 12.7 7.3 14.3 Increase of 3-4% 24.6 9.1 14.5 16.1 Increase of 4-5% 15.8 12.7 3.6 23.2 Increase of 5-7.5% 5.3 12.7 1.8 16.1 Increase of 7.5-10% 1.8 7.3 0.0 8.9 Increase of 10% or more 5.3 14.5 0.0 5.4 ------------------- ------------------------------------------- Median Expected Change 3-4% 3-4% 1-2% 4-5% ***Percentages may not sum to 100 because of rounding. Summary of Returns April 2021 April vs. March Six Months from Now vs. April Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 44.5 58.6 29.3 8.4 50.2 59.1 71.0 22.5 4.4 66.6 Conditions New Orders 38.2 49.1 36.3 13.1 36.0 48.2 65.5 25.0 6.0 59.5 Shipments 22.0 39.8 45.7 14.5 25.3 53.4 68.1 23.4 5.1 63.0 Unfilled Orders 19.3 36.0 54.2 8.8 27.2 10.0 26.9 50.5 22.0 4.9 Delivery Times 28.2 33.6 59.9 5.8 27.8 16.4 17.6 65.9 14.1 3.5 Inventories 14.4 24.1 65.0 6.8 17.3 24.3 36.9 39.6 15.2 21.7 Prices Paid 72.6 71.4 23.0 2.3 69.1 63.4 74.5 20.1 3.0 71.5 Prices Received 30.2 35.7 59.7 1.3 34.5 46.9 65.7 29.4 2.0 63.6 Number of Emp. 27.4 35.1 59.6 4.2 30.8 46.5 56.1 38.9 0.4 55.7 Avg. Emp. Wrkwk. 36.4 35.5 56.9 5.7 29.8 11.4 31.4 55.7 9.3 22.0 Capital Ex. -- -- -- -- -- 33.8 40.1 52.4 3.5 36.7 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 because of rounding, omission by respondents, or both. (4) Survey results reflect data received through April 12, 2021. *With the April report, Philadelphia Fed researchers released revised historical data, which incorporate adjusted seasonal factors for 2020 and 2021. The full set of historical data and a brief discussion of the revisions are available at www.philadelphiafed.org/surveys-and-data/regional-economicanalysis/mbos- historical-revisions-2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: April 15, 2021, at 8:30 a.m. ET. March 2021 Note: Survey responses were collected from March 8 to March 15. Manufacturing conditions in the region strengthened further this month, according to firms responding to the March Manufacturing Business Outlook Survey. The indicators for general activity and new orders rose sharply, and the shipments and employment indexes also increased. Price pressures also rose, according to the surveyed firms. All of the survey's indexes for future conditions increased, as the firms indicated more widespread optimism about growth over the next six months. Current Activity Index Hits 50-Year High The index for current manufacturing activity in the region jumped from a reading of 23.1 in February to 51.8 this month, its highest point in nearly 50 years. Nearly 59 percent of the firms reported increases in current activity this month (up from 35 percent last month), while only 7 percent reported decreases (down from 11 percent). The current new orders index also increased substantially to a 50-year high, rising 28 points to 50.9 in March. The current shipments index increased 9 points to 30.2. The firms continued to add to their payrolls this month. The current employment index increased from a reading of 25.3 in February to 30.1 this month. Nearly 32 percent of the responding firms reported increases in employment, while only 1 percent of the firms reported decreases. The current workweek index increased 9 points to 39.7. Price Increases Are More Widespread The firms continued to report price pressures from purchased inputs. The prices paid index rose sharply from 54.4 to 75.9, its highest reading since March 1980. Over 77 percent of the firms reported higher input prices this month, up from 55 percent last month. With respect to prices received for firms' own manufactured goods, 35 percent of the firms reported higher prices, up from 18 percent last month. The prices received index increased 15 points to 31.8. Firms' Optimism for Growth Expands The diffusion index for future general activity more than recovered from its decline last month, rising 22 points to 61.6 this month, its highest reading since June 2020. Nearly 70 percent of the firms expect increases in activity over the next six months (up from 55 percent last month), while 8 percent expect declines (down from 15 percent). The future new orders and shipments indexes also rebounded, rising 15 points and 24 points, respectively. The future employment index rose 12 points to 46.9. The percentage of firms expecting to increase employment over the next six months (51 percent) remained higher than the percentage expecting to decrease employment (4 percent). The future capital spending index rose 11 points to 35.9. Firms Report Difficulties Finding Skilled Workers In special questions this month, the firms were asked generally about worker shortages, any perceived mismatches between skill requirements and labor supply, and the ways in which they were dealing with these problems (see Special Questions below). Over 64 percent of the firms indicated labor shortages, while 59 percent indicated skills mismatches between requirements and available labor. Nearly 45 percent of the surveyed firms also reported that they had positions that have remained vacant for more than three months. A sizable share of firms (29 percent) reported seeing a significant shortage in qualified applicants for some skills and positions, while 18 percent of the firms reported seeing a broad labor shortage, such that it is hard to fill any position. In addition to increasing wages and stepping up recruiting efforts, the firms have adopted a mix of strategies to deal with these problems, including increasing training of existing employees and new hires. Nearly 43 percent of the firms indicated that they have hired less qualified workers to meet their labor requirements. Summary The firms' responses indicated widespread growth in the region's manufacturing sector this month. The survey's broadest measures for activity, new orders, shipments, and employment all increased, with the former two indexes reaching long-term highs. Additionally, the firms have indicated mounting price pressures. The survey's future indexes indicate more optimism about continued growth over the next six months. Special Questions (March 2021) 1. Has your firm experienced any significant labor shortages or mismatches between labor skill requirements and labor supply?* Percent (%) Labor shortages 64.3 Skills mismatch 58.9 Job vacancies remaining more than three months 44.6 2. Is your firm experiencing a labor shortage in general or in certain skills, abilities, or positions? We are hiring and receive a sufficient number of qualified applicants to fill open positions. 8.9 We are seeing a significant shortage in qualified applicants for some skills and positions. 28.6 We are seeing a tightening labor market, such that it is getting harder to fill positions in general, but still possible to fill them. 21.4 We are seeing a broad labor shortage, such that it is hard to fill any position. 17.9 We are not hiring. 19.6 Not applicable 1.8 No response 1.8 3. What actions has your firm taken to address skills shortages?* Increase recruitment efforts 57.1 Increased wages 53.6 Have hired less qualified workers to meet labor requirements 42.9 Increased training for hired workers 37.5 Provided additional training to existing staff 28.6 Partner with educational institution to align curriculum with talent needs 23.2 Increase recruitment incentives 21.4 Expand recruitment outside the region 14.3 Phased retirement program to retain older workers 14.3 Decreased production 12.5 Increase benefits 10.7 Other 7.1 *Percentage will not sum to 100 percent because more than one answer could be selected. Summary of Returns March 2021 March vs. February Six Months from Now vs. March Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 23.1 58.9 34.0 7.1 51.8 39.5 69.6 13.8 8.0 61.6 Conditions New Orders 23.4 57.9 35.1 7.0 50.9 36.6 63.1 19.1 11.8 51.2 Shipments 21.5 43.8 39.9 13.7 30.2 32.3 67.2 19.5 10.7 56.5 Unfilled Orders 12.6 34.8 52.2 13.0 21.8 6.0 24.5 58.0 12.4 12.1 Delivery Times 15.1 31.8 63.4 2.4 29.5 -0.3 25.0 60.4 7.7 17.3 Inventories 20.0 29.6 52.9 17.5 12.1 11.6 40.0 34.5 18.4 21.6 Prices Paid 54.4 77.4 21.0 1.6 75.9 53.6 72.9 15.7 5.2 67.7 Prices Received 16.7 34.8 60.3 3.0 31.8 37.8 54.3 33.5 3.6 50.6 Number of Emp. 25.3 31.5 64.0 1.4 30.1 34.7 50.8 41.4 3.8 46.9 Avg. Emp. Wrkwk. 30.6 42.1 51.0 2.4 39.7 10.3 24.7 57.5 13.6 11.1 Capital Ex. -- -- -- -- -- 25.2 38.7 50.3 2.8 35.9 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through March 15, 2021. The seasonal factors that our researchers at the Philadelphia Fed use to calculate the survey's diffusion indexes were affected by atypical patterns because of the onset of the pandemic one year ago. For several variables, revised seasonal factors shifted by much more than is normal. We may revise our seasonal adjustment approach after further investigation. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: March 18, 2021 at 8:30 a.m. ET. February 2021 Note: Survey responses were collected from February 8 to February 16. Manufacturing activity in the region continued to grow, according to firms responding to the February Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments declined from January's readings but remained elevated. Additionally, employment increases were more widespread this month. Most future indexes moderated this month but continue to indicate that firms expect growth over the next six months. Current Indicators Remain Positive The diffusion index for current activity remained positive for the ninth consecutive month but decreased 3 points to 23.1 in February. The percentage of firms reporting increases this month (35 percent) exceeded the percentage reporting decreases (11 percent). The index for new orders decreased 7 points to a reading of 23.4. Over 37 percent of the firms reported increases in new orders this month, compared with 45 percent last month. The current shipments index edged down 1 point to 21.5 in February. On balance, the firms reported increases in manufacturing employment for the eighth consecutive month. The current employment index increased 3 points to 25.3. Employment increases were reported by 30 percent of the firms, while 5 percent reported decreases. The average workweek index was also positive for the eighth consecutive month and rose 12 points to 30.6. More Firms Report Increases in Input Prices Price increases were more widespread this month for inputs but less widespread for firms' own goods. The prices paid diffusion index increased 9 points to 54.4. Nearly 55 percent of the firms reported increases in input prices, compared with 47 percent last month. More than 45 percent of the firms reported no change. The current prices received index, reflecting manufacturers' own prices, decreased 20 points to 16.7. Nearly 18 percent of the firms reported increases in prices of their own manufactured goods, compared with 38 percent in January; most firms (80 percent) reported stable output prices. Firms Expect Own Prices to Match Higher Rate of Inflation In this month's special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters. Regarding their own prices, the firms' median forecast was for an increase of 3.0 percent, higher than the 2.0 percent that was forecast when the question was asked in November. The firms' actual price change over the past year was 2.0 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters, the same as in November. When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was 3.0 percent, an increase from 2.0 percent in the previous quarter. The firms' median forecast for the long-run (10-year average) inflation rate was 3.0 percent, an increase from 2.5 percent in the previous quarter. Firms' Outlook Softens but Continued Growth Is Expected The respondents recorded weaker expectations for growth compared with January. The diffusion index for future general activity decreased 13 points to 39.5 in February. Nearly 55 percent of the firms expect growth over the next six months (down from 64 percent last month), while only 15 percent expect declines (up from 12 percent). The future new orders index fell 11 points to 36.6, and the future shipments index decreased 14 points to 32.3 this month. The future employment index fell 4 points to 34.7. Over 40 percent of the firms expect to increase employment in their manufacturing plants over the next six months, compared with 6 percent that anticipate employment declines. Summary Responses to the February Manufacturing Business Outlook Survey suggest continued expansion for the region's manufacturing sector. The indicators for current activity, new orders, and shipments fell slightly from last month but remained elevated, and the current employment index increased slightly. The survey's future indexes moderated this month but continue to suggest expected growth over the next six months. Special Questions (February 2021) Please list the annual percent change with respect to the following: Current Previous (Nov. 2020) For your firm: Forecast for next year (2021Q1-2022Q1) 1. Prices your firm will receive (for its own goods and services sold). 3.0 2.0 2. Compensation your firm will pay per employee (for wages and benefits). 3.0 3.0 Last year's price change (2020Q1-2021Q1) 3. Prices your firm did receive (for its own goods and services sold) over the last year. 2.0 1.0 For U.S. consumers: 4. Prices consumers will pay for goods and services over the next year. 3.0 2.0 5. Prices U.S. consumers will pay for goods and services over the next 10 years (2021-2030). 3.0 2.5 The numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change. Summary of Returns February 2021 February vs. January Six Months from Now vs. February Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 26.5 34.6 47.2 11.4 23.1 52.8 54.7 24.1 15.2 39.5 Conditions New Orders 30.0 37.2 46.2 13.9 23.4 47.5 49.4 35.8 12.8 36.6 Shipments 22.7 39.2 40.4 17.7 21.5 46.1 45.8 33.6 13.5 32.3 Unfilled Orders 25.6 20.0 71.4 7.4 12.6 10.8 24.2 54.7 18.3 6.0 Delivery Times 30.0 22.2 70.8 7.0 15.1 8.1 17.7 64.3 18.0 -0.3 Inventories 12.6 33.0 48.4 13.0 20.0 14.0 30.1 47.8 18.5 11.6 Prices Paid 45.4 54.6 45.2 0.2 54.4 41.3 56.7 35.5 3.2 53.6 Prices Received 36.6 17.9 79.8 1.2 16.7 33.9 43.3 48.1 5.5 37.8 Number of Emp. 22.5 30.0 63.5 4.7 25.3 38.9 40.3 49.8 5.7 34.7 Avg. Emp. Wrkwk. 18.6 35.0 59.6 4.3 30.6 14.7 21.9 64.0 11.7 10.3 Capital Ex. -- -- -- -- -- 35.4 32.4 58.5 7.2 25.2 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through February 16, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: February 18, 2021, at 8:30 a.m. ET. January 2021 Note: Survey responses were collected from January 11 to January 19. Manufacturing activity in the region continued to grow, according to firms responding to the January Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments increased notably this month and remained positive for the eighth consecutive month. The survey’s future indexes remained at high readings and continue to indicate that firms expect growth over the next six months. Current Indicators Are Positive and Higher The diffusion index for current activity increased from a revised reading of 9.1 in December to 26.5.* The percentage of firms reporting increases this month (40 percent) exceeded the percentage reporting decreases (13 percent). The index for new orders increased 28 points to a reading of 30.0, its highest reading in three months. Over 45 percent of the firms reported increases in new orders this month. The current shipments index increased 11 points to 22.7 in January. On balance, more firms reported increases in manufacturing employment this month. The current employment index has remained positive for seven consecutive months and increased 17 points to 22.5 in January. Employment increases were reported by 33 percent of the firms, while 10 percent reported decreases. The average workweek index was also positive for the seventh consecutive month and edged 3 points higher to 18.6. Price Indicators Increase This Month Price increases were more widely reported this month. The prices paid diffusion index increased 21 points to 45.4. Over 47 percent of the firms reported increases in input prices, while only 2 percent reported decreases. The current prices received index, reflecting manufacturers’ own prices, also increased 21 points to 36.6. Over 38 percent of the firms reported increases in prices of their own manufactured goods, while 2 percent reported declines. The largest percentage of firms (60 percent) reported no change in prices for their manufactured goods. Firms Expect to Increase Production in the Near Term In the Special Questions this month, the firms were asked to characterize demand for their products over the past few months and to forecast their production for the first quarter of the year. Most firms (64 percent) reported an increase in underlying demand, but 18 percent characterized underlying demand as decreasing in recent months. Over 69 percent of the firms anticipate increasing production in the first quarter, while 24 percent expect decreases. Among the firms expecting an increase in production, 51 percent indicated that this would be accomplished with additional workers. Most of the remaining firms indicated higher production would be accomplished without additional hiring: Nearly 23 percent would increase the hours of existing workers, and 20 percent indicated production could be increased with higher productivity of existing workers. Firms Continue to Expect Growth The survey’s indicators for future general activity improved this month, and although other future indicators declined somewhat, they remained at elevated readings. The diffusion index for general activity over the next six months increased 10 points, from a revised reading of 43.1 to 52.8 in January. The percentage of firms expecting growth over the next six months (64 percent) remained significantly greater than the percentage expecting declines (12 percent). The future new orders index held steady at an elevated reading of 47.5, and the future shipments index decreased 2 points to 46.1 this month. The future employment index fell 2 points: Over 44 percent of the firms expect to increase employment in their manufacturing plants over the next six months. The future capital spending index showed notable improvement, increasing 12 points to 35.4. Summary Responses to the Manufacturing Business Outlook Survey suggested continued expansion for the region’s manufacturing sector in January. Indicators for general activity, new orders, shipments, and employment remained positive and were stronger in January. Changes in future indexes were mixed this month, but levels remained positive, suggesting that overall growth is expected to continue over the next six months. * The survey’s annual historical revisions, which incorporate new seasonal adjustment factors, were released on January 14, 2021. The full set of revised historical data is available at www.philadelphiafed.org/surveys-and-data/ regional-economic-analysis/mbos-historical-revisions-2021. Special Questions (January 2021) 1. Over the past several months, how would you characterize the underlying demand for your manufactured products? Exclude any purely seasonal effects. % of firms Significant increase 20.0 Modest increase 43.6 Subtotal 63.6 No change 18.2 Modest decrease 14.5 Significant decrease 3.6 Subtotal 18.2 2. How will your firm's total production for the first quarter of 2021 compare with that of the last quarter of 2020? An increase of: 10% or more 16.4 8-10% 1.8 6-8% 7.3 4-6% 16.4 2-4% 10.9 1-2% 14.5 less than 1% 1.8 Subtotal 69.1 No change 7.3 A decline of: less than 1% 0.0 1-2% 1.8 2-4% 1.8 4-6% 7.3 6-8% 1.8 8-10% 0.0 10% or more 10.9 Subtotal 23.6 3. If you expect to increase production in the next quarter, this will be accomplished by: % of firms Hiring additional workers 51.4 Increasing work hours of current staff, without hiring additional workers 22.9 Increasing productivity of current staff, without hiring additional workers 20.0 Other 5.7 Summary of Returns January 2021 January vs. December Six Months from Now vs. January Prev. Prev. Diff. Inc. No ch. Dec. Diff. Diff. Inc. No ch. Dec. Diff. Index Index Index Index General Business 9.1 39.5 44.2 13.0 26.5 43.1 64.4 15.1 11.6 52.8 Conditions New Orders 1.9 45.3 38.7 15.3 30.0 47.5 63.2 16.2 15.6 47.5 Shipments 12.0 43.4 35.9 20.7 22.7 48.2 62.6 16.8 16.5 46.1 Unfilled Orders -0.1 31.7 56.7 6.2 25.6 15.4 26.8 51.4 16.0 10.8 Delivery Times 17.3 32.6 64.8 2.6 30.0 7.4 22.2 59.5 14.1 8.1 Inventories 7.7 23.5 64.0 10.9 12.6 8.3 29.4 52.0 15.4 14.0 Prices Paid 24.9 47.3 50.0 1.9 45.4 45.1 46.2 43.5 4.9 41.3 Prices Received 16.1 38.1 60.3 1.5 36.6 34.3 36.9 56.5 3.0 33.9 Number of Emp. 5.6 32.8 53.6 10.3 22.5 41.3 44.1 45.3 5.2 38.9 Avg. Emp. Wrkwk. 15.5 28.9 60.8 10.3 18.6 19.2 25.9 58.8 11.2 14.7 Capital Ex. -- -- -- -- -- 23.8 39.9 51.8 4.5 35.4 Notes: (1) Diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. (2) All data are seasonally adjusted. (3) Percentages may not sum to 100 percent because of rounding, omission by respondents, or both. (4) Survey results reflect data received through January 19, 2021. Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey Released: January 21, 2021, at 8:30 a.m. ET.