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Survey Shows Pace of Growth Fell Back

For immediate release
Contact: Marilyn Wimp, E-mail Manager of Media Relations, (215) 574-4197

Firms responding to May’s Business Outlook Survey indicated that manufacturing growth fell back from the pace of recent months. The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell from a reading of 8.5 in April to -5.8 in May.

The survey’s broad indicators for general activity fell into negative territory for the first time in eight months. Firms reported lower levels of activity and nearly flat new orders and employment. Overall price pressures were reported to be on the wane this month. The outlook among the reporting firms was notably less optimistic.

In special questions this month, firms were asked about the factors that are influencing their production and hiring plans. Among the top three factors restraining hiring, the need to keep operating costs low (50 percent) ranked nearly as high as expected low sales growth (51 percent). Uncertainty about health-care costs, the inability to find skilled workers, and uncertainty about regulations and policies were also prominently listed.

Special Questions

  • While 54 percent of the firms expect to increase production over the next six months, only 21 percent plan to increase employment.
  • Twenty-two percent of firms expect to increase work hours without increasing staff.
  • Seventeen percent plan to increase production by increasing the productivity of existing staff.

Labor Market

  • Firms’ responses suggest a slight decline in employment this month.
  • The current employment index, which had been positive for eight consecutive months, decreased 19 points, to -1.3. The percentage of firms reporting decreases in employment (16 percent) was slightly higher than the percentage reporting increases (14 percent).
  • Firms also reported a slight decrease in average hours worked compared with April.


  • Indexes for prices paid and prices received both decreased, suggesting that price pressures moderated this month. The prices received index decreased 14 points to its first negative reading in nine months, and the prices paid index declined 18 points. Firms reported that prices received for their own goods fell: More firms reported price decreases (12 percent) than reported increases (8 percent).

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 Marilyn Wimp, the Bank’s manager of media relations, at (215) 574-4197. The next Business Outlook Survey will be released at 10 a.m., June 21, 2012, and will be made available on our website and over Businesswire. External 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. (63 KB)

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Daneil Mazone E-mail
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(215) 574-7163
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Joey Lee E-mail
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