Philadelphia Fed Manufacturing Index

What Is the Philly Fed Index?

The Philadelphia Fed Manufacturing Business Outlook Survey is a monthly diffusion index of manufacturing activity in the Third Federal Reserve District (Pennsylvania, southern New Jersey, Delaware). It surveys manufacturing firms about current and expected conditions across several sub-categories: new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, employment, and average workweek.

The Philly Fed uses a different scaling than ISM: rather than scaling around 50, the Philly Fed is scaled around zero, with positive values signalling expansion and negative values signalling contraction. The release is among the earliest regional Fed surveys each month.

Why It Matters for Markets

The Philly Fed is one of the most-watched regional Fed surveys because of its early release timing and reliability as a leading indicator for the national ISM Manufacturing PMI. The two indices move broadly in tandem with a 1-2 month lead from Philly Fed, making it a useful early signal of national manufacturing trends.

For markets, the release moves manufacturing-sensitive equities and bond yields on surprises. The reaction is smaller than ISM (regional vs national scope) but the early timing makes it a top-tier data point for traders building positions ahead of the ISM release.

How to Read the Print

Headline index vs zero line. Above zero is expansion, below zero is contraction. Sustained readings 5+ points below zero signal manufacturing recession.

New orders sub-index. The most forward-looking component. Leading indicator of the headline by 1-2 months.

Prices paid sub-index. The manufacturing-input inflation signal. Sustained high prices paid (above 40) signals upstream commodity or supplier pressure.

Employment sub-index. A leading indicator of regional manufacturing employment, useful for state-level economic forecasting.

Future activity sub-indices. The Philly Fed survey asks about both current conditions and 6-month-ahead expectations. The future component leads the current component and is a useful gauge of business sentiment.

Historical Context

The Philly Fed data series goes back to 1968, one of the longest-running US business surveys. The 2010-2019 average was approximately 14 (well above zero, indicating expansion). The pandemic shock dropped the headline to -56 in April 2020, the lowest in the data series.

Through 2024-2025, the Philly Fed has run in a -10 to +5 range, broadly mirroring the weak national manufacturing picture. The new orders sub-index has been the most reliable forward signal; sustained positive new orders readings have typically preceded headline-index recoveries within 1-2 months.