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Manufacturers See Improvement in Business Activity

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

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Regional manufacturing continued to improve in December, according to the firms participating in December's Business Outlook Survey. The general activity index, the survey's broadest measure of manufacturing conditions, increased to 10.3 this month from 3.6 in November.

All of the broad indicators, including those for new orders and employment, remained positive and suggest a modest expansion of activity. The broadest indicator of future activity reflected a trend of increased optimism about growth over the next six months.

Special Questions: Expectations for Changes in Input, Labor Costs in 2012

  • Similar to responses in previous years, the largest annual increase in costs is expected to be for health benefits (7.3 percent).
  • Other labor costs (wages and non-health-care costs) are expected to rise only 2.1 and 2.5 percent, respectively.
  • All other nonlabor expense categories are expected to increase in 2012: energy (1.8 percent), raw materials (3.3 percent), and intermediate goods (2.4 percent).
  • Firms were also asked how the expected cost increases will compare to 2011 costs. In every category, the percentage of firms indicating that their costs would be
    higher in 2012 was greater than the percentage reporting that their costs would be

Labor Market

  • Labor market conditions continue to show overall improvement, but indexes edged
    down this month.
  • The current employment index remained positive at 10.7, only 1 point lower than in November. The average workweek index also remained positive but fell nearly 9 points.


  • Increasing costs were more widespread this month compared to last month. The
    percentage of firms reporting higher input costs increased from 31 percent in November to 41 percent this month. The prices paid diffusion index increased 11 points.
  • The percentage of firms reporting increases in prices for their manufactured goods (22 percent) was higher than that reporting decreases (10 percent). The prices received diffusion index increased 9 points, to its highest reading in seven months.

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 survey's annual historical revisions, incorporating new seasonal adjustment factors, will be released at 10 am., on Thursday, January 12, 2012. The next Business Outlook Survey will be released at 10 a.m., Thursday, January 19, 2012, 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 and savings and loan 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. (62 KB)

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Daneil Mazone E-mail
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(215) 574-7163
(267) 535-1808 (cell)

Joey Lee E-mail
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(215) 574-3840
(215) 983-6820 (cell)