It is unknown whether the Philly Fed was using the BLS' pre-upgrade computers to calculate their diffusion index of broad manufacturing conditions, but the bottom line is that while the Fed is telling the market the economy is deteriorating and is adjusting its GDP forecast accordingly, the manufacturers in the Philadelphia region did not get the memo, and as a result the general business activity number soared from 9.3 to 22.3, more than double the expected 10.3. This was driven by a jump in both New Orders and Shipments, both printing at 21.2, a jump in Inventories to -1.8 from -11.3, as well as the Number of Employees and the Average Employee workweek, which soared from low single digits and negative, to over 10 each. The only negative in the report is that while Prices Paid jumped to 25.3, prices received barely budged. Then again, with the Fed micromanaging everything now, who needs profits when one can just go public and sell stock indefinitely.
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Finally, the most laughable component of today's Philly Fed was not the current conditions, but the 6 month forward outlook,which in soaring from 38.9 to 58.2, printed at the highest level since September 2003 and just why of all time highs.
The survey’s future indicators suggest markedly improved optimism among the reporting manufacturers. The future general activity index increased from 38.9 to 58.2, exceeding its previous highs since the end of the recession in 2009 (see Chart). Slightly over 58 percent of firms expect increases in activity over the next six months; no firms indicated that they expect decreases over the next six months. The indexes for future new orders and shipments also improved, rising 23 and 18 points, respectively. The future employment index also increased 9 points. Over 37 percent of the firms expect to increase employment over the next six months.
Hopium has never flowed more freely.
In summary: "According to respondents to the September Business Outlook Survey, the region’s manufacturing sector continued to grow this month. All the broad indicators were positive, with firms reporting a pickup in general activity, new orders, shipments, and hiring. Price pressures were slightly more widespread this month, with more firms reporting higher prices for their purchased inputs. Firms’ outlook showed notable improvement this month, with a majority of firms now expecting to expand manufacturing activity over the next six months and one-third that expect to add workers."
But don't worry: there will be no Taper, because the Fed really has no idea what it is doing any more.