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Survey Suggests Weaker Business Conditions

For immediate release
Contact: Katherine Dibling, E-mail Public Affairs Specialist, (215) 574-4119

Manufacturing firms responding to the Business Outlook Survey indicated weaker business conditions this month. The survey’s diffusion index of current activity fell to -16.6 from a reading of -5.8 in May, its second consecutive negative reading. The survey’s indicators of future activity remained positive and improved slightly.

Indicators for new orders, shipments, and average work hours were also negative this month, suggesting overall declines in business. Indexes for current unfilled orders and delivery times both registered negative readings again this month, suggesting lower levels of unfilled orders and faster deliveries.

In the special question this month, firms were asked about their expected spending on new plant and equipment over the next six to 12 months relative to actual spending in the past six to 12 months.

Special Question

  • Almost 32 percent of firms expect to increase their spending on new plant and equipment in 2012, compared to 34.7 percent in November 2011, the last time this question was asked.
  • Almost 20 percent of firms expect to decrease spending this year, compared to 33 percent in November.
  • Forty-two percent of firms expect spending to remain unchanged in 2012, up from 25 percent in November.

Labor Market

  • Firms’ responses suggest steady employment but shorter hours.
  • The current employment index increased 3 points.
  • Fourteen percent of the firms reported an increase in employment; 12 percent reported declines.
  • The index for the average workweek was lower this month, decreasing 14 points. It is the third consecutive negative reading.


  • Indexes for prices paid and prices received both decreased and were negative this month, suggesting that price pressures have moderated notably.
  • Nearly 16 percent of the firms reported lower prices for inputs this month; 13 percent reported increases.
  • Firms also reported that the prices received for their own products fell. For the second consecutive month, more firms reported a decrease in product prices (17 percent) than reported an increase (10 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 Katherine Dibling, the Bank’s public affairs specialist, at (215) 574-4119. The next Business Outlook Survey will be released at 10 a.m., Thursday, July 19, 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. (64 KB)

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