After just barely holding onto positive territory in June, sentiment in the manufacturing sector came booming back in the month of July.  In Thursday’s release of the July Philadelphia Fed Manufacturing report, overall sentiment surged from 0.3 up to 21.8.  That’s the highest reading for the index since July 2018, but more importantly, it was also the largest m/m gain for the index since June 2009.  For some perspective, the last two times the headline index for the Philly Fed report showed a m/m increase of 20 points or more were in January 2012 (two months after the end of a recession) and in June 2009 (the month that recession ended).  Surges like July’s don’t normally occur when the economy is on the cusp of a recession.

Breadth among the various components of this month’s report was also solid. Of the report’s nine subcomponents, only two declined in July’s report, and three saw double-digit increases.  Two components that were especially strong were Average Workweek and Number of Employees.  In the Philadelphia region, at least, employment appears to be very strong.

Employment is so strong in fact that the index of Number of Employees has only been higher in one other month spanning the 50-year history of the index. The only other time it was higher was October 2017.

This month’s special question also suggests a solid backdrop for manufacturing firms in the Philadelphia region. When asked about the underlying demand trends for their products, more than half reported increased demand, while less than a third are experiencing weaker demand. Start a two-week free trial to one of Bespoke’s premium research services for coverage of economic, earnings, and market trends.

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