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Firms See Slight Growth in Business Activity

For immediate release
Contact: Katherine Dibling, E-mail Senior Media Representative, (215) 574-4119

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Regional manufacturing activity grew slightly in May, according to the respondents to the Business Outlook Survey. Nearly all of the survey’s broadest indicators remained positive but fell from their readings in April. The diffusion index of current activity decreased to 3.9 from 18.5 in April.

The current employment index, however, showed resilience and improved this month. Indicators for prices fell back somewhat from their relatively high readings of recent months but still suggest considerable price pressure. The survey's indicators of future activity fell sharply this month, reflecting consensus about future growth.

Special Questions: Plans for Hiring

  • Among the 48 percent of firms that are planning to increase employment over the next year, the most frequently cited reason influencing this decision was the expectation of high sales growth. The second and third most cited reasons were that current staff is overworked and the need to obtain skills not possessed by current staff.
  • The most frequently cited factor for restraining hiring among all the firms was the need to keep costs low and low expectations of sales growth. Uncertainty about health-care costs, regulations, and government policies was also prominently listed.

Price Pressures Moderate Slightly

  • Fifty-six percent of the firms reported higher prices for inputs this month, and 8 percent reported a decline.
  • Twenty percent reported higher prices for their own goods this month; just 3 percent reported price reductions.

Firms See Improved Labor Market Conditions

  • Firms' responses continue to indicate overall improvement in the labor market despite weaker activity, orders, and shipments.
  • The percentage of firms reporting an increase in employment (32 percent) is higher than the percentage reporting a decline (10 percent). Only slightly more firms reported a longer workweek (17 percent) than reported a shorter one (13 percent) and the workweek index decreased 14 points.

This survey, which was started in 1968, gathers information on the manufacturing industry in the Third Federal Reserve District covering eastern Pennsylvania, southern New Jersey, and Delaware. The survey asks about the current pace of business in the participants' plants and their future expectations of business.

To arrange an interview, contact Katherine Dibling, E-mail the Bank's senior media representative, at (215) 574-4119. The next Business Outlook Survey will be released at 10 a.m., Thursday, June 16, 2011, and will be made available on our website and over Businesswire. External Link The aggregate historical data series is also available on the Bank’s website.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.

Related Resources

Business Outlook Survey

Download the chart for this month's survey. (45 KB)

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