Philly Manufacturing Survey Signals Stronger Momentum as Orders and Shipments Increase
In April, Philadelphia’s regional manufacturing activity expanded for the fourth consecutive month, with the index for general business activity advancing from 18.1 to 26.7. This month, 32.6% of firms reported increases in activity, while only 5.9% noted decreases. The index for new orders jumped from 8.6 to 33.0, while the shipments index climbed 11.8 points to 34.0. Meanwhile, the employment index turned negative, falling 5.9 points to -5.1, and the average employee workweek index moved up from 2.8 to 7.7.
The prices paid and prices received indexes both rose in April, increasing from 44.7 to 59.3 and from 21.2 to 33.5, respectively. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.
Looking ahead, most indicators showing future expectations for growth declined but remain elevated. After falling 2.8 points in March, expectations for future business activity ticked up 0.8 points to 40.8 in April. The gain came from a decline in the proportion of firms expecting a decrease in activity (15.7%). At the same time, the proportion of firms expecting an increase in activity (56.5%) moved up in April. The future new orders index dropped from 49.6 to 45.7, while the capital expenditures index climbed from 25.8 to 35.2. The future prices paid index dipped from 53.7 to 50.2, while the future prices received index rose from 38.4 to 50.2. Additionally, the index for future employment moved down from 40.4 to 35.9.
In April, firms were asked about changes in wage rates and compensation packages as well as expectations for input and labor costs. Of those responses, 46.2% of firms indicated wage rates and compensation costs have increased over the past three months, 53.8% reported no change and no firms indicated a decrease during that time. When asked about input and labor costs, firms expect higher energy costs (up 5% to 7.5%), higher cost of health benefits (up 4% to 5%) and smaller increases in other categories. Notably, 19.2% of respondents anticipate both energy and health benefits costs to rise by more than 12.5% during 2026.