After an insanely positive increase in last month’s headline index, the Philly Fed Manufacturing Index of Current Business Conditions retreated this month but still managed to beat expectations. While economists were expecting the headline indices to retreat from a multi-decade high of 43.3 down to 25.0, the actual decline was smaller at 10.5 points, bringing the index down to 32.8. To put this in perspective, outside of last month’s blowout reading, the current level would still have been the highest reading since November 2014.
Although the headline index declined this month, every one of the index’s sub-components saw a m/m increase in March. Going back to 1980, there have only been three other months where the General Business Conditions Index declined, but every other component rose. Those occurrences were in May and September of 1996 and December 2003. In order to see just how much things have changed in the last few months regarding the Philly Fed report, below we have charted each of the individual components listed in the table. Yes, it is ‘soft’ data, but there has been a virtual sea change in sentiment.