While the Empire Manufacturing report (released earlier) disappointed relative to consensus forecasts, the February Philly Fed report beat expectations, coming in at a level of 25.8 compared to January’s reading of 22.8. At 21 months and counting, the Philly Fed is currently in its longest streak of positive readings since August 2015. More impressively, though, the last 15 months have seen readings in excess of 20. The only other period in the history of the report (since 1980) that saw as many or more monthly readings above 20 was in the 17-month stretch ending in June 1984!
The table below shows the internals of this month’s report, which were mixed. While New Orders surged, Shipments dropped sharply. On the inflation front, Prices Paid saw the third largest increase of any component and is now at its highest levels since 2011 (chart below).
Finally, with respect to prices, one special question asked of respondents in this month’s report had to do with what the expected annual average percent change in prices will be for US consumers over the next ten years. As shown in the graphic below, respondents expect prices to rise by an average of 3% per year for the next ten years, which is up from 2.5% in November. Here again, we have another sign of inflation creeping into the picture.