Philly Fed Unexpectedly Soars To Second Highest On Record

Anyone expecting the coronavirus pandemic to hit regional Fed surveys following the recent plunge in the Chicago PMI was in for a disappointment this week, when first the NY Fed's Empire State mfg survey unexpectedly printed at the highest since mid-2018, and then moments ago the Philly Fed blew it out of the ballpark with a massive surge in its business outlook survey, where the current general activity rose nearly 20 points this month to 36.7, smashing expectations of a drop from 17.0 to 11.0, and the highest index reading since February 2017. More importantly, this was the second highest print on record.

The Philly Fed was merely the latest regional Fed to not confirm the recent weakness telegraphed by the Chicago PMI which earlier this month tumbled to the lowest level since 2015.

Commenting on the monthly report, the Philadelphia Fed said that "the survey’s current indicators for general activity, new orders, and shipments increased this month,suggesting more widespread growth.  The firms reported expansion in  employment, although at a moderated pace from January. The survey’s broad future indexes also showed improvement this month, indicating that growth is expected to continue over the next six months."

That said it wasn't clear just what catalyst sparked such manufacturing sector euphoria, aside perhaps form a delayed kneejerk reaction to the Trump trade war ceasefire.

The percentage of firms reporting increases(52 percent) this month exceeded the percentage reporting decreases(15 percent). As shown in the table below, the index for new orders increased 15 points to 33.6, its highest reading since May 2018. Over 50 percent of the firms reported an increase in new orders, up from 46 percent in January. The current shipments index increased 2 points. Both the unfilled orders and delivery times indexes moved into positive territory this month, suggesting slightly higher unfilled orders and slower delivery times.

To be sure, it wasn't all roses: while firms reported overall increases in manufacturing employment this month, the current employment index decreased 10 points to 9.8. Just 18 percent of the firms reported higher employment, compared with 28 percent last month. The average workweek index, however, increased 5 points.

Alas, don't expect this number to be repeated with the latest batch of private sector PMIs starting tomorrow, with trade war far in the rearview mirror and instead businesses now freaking out over what the collapse in Chinese supply chains means for the profits and viability.