Philadelphia Fed Nonmanufacturing Business Outlook Survey: ‘ ad acta’.

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Businesses that responded to the December Nonmanufacturing Business Outlook Surveyshowed a year-over-year increase in productivity throughout the region. The state’s GDP grew at a pace of +1.1% in 2016, notably increasing in Q4 ’16. Further, those operating in the Mining and manufacturing sectors significantly weighed on GDP performance for Pennsylvania last year.

Reading through to December 2017’s Business Outlook Survey, indicators reported both full-time employment and new orders declined. The increase in GDP growth came from the tailwind business’s received from higher prices for their goods and services offered.

More to the point, the prices received index increased +12bp to 11.8 in December, right on par with the index’s historical average (11.6). The prices paid index also rose by +4bp to 27.5. Zooming out for context, the price’s paid index maintained a level above its historical average of 20.2 for three consecutive months. Although, the majority of businesses’ reported a sustained rise in input prices in December.

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Interestingly, both indexes that survey capital spending declined, despite the new tax bill’s explicit CAPEX deduction allowance of one-hundred percent. Unless, that has changed and not aware of; if so I’ll stand corrected.

Summation from the survey is that businesses continue to be optimistic about their future activity in 1H of 2018, To wit: The diffusion index for future activity at the individual firm level increased +3bp to 45.6. More than 56% of businesses anticipated a higher pace of activity over the next six months. Lastly, the future regional activity index also rose, from 31.3 in November to 39.2 in December. However, both future indexes remained below their historical averages, 49.2 (firm-level index), and 43.5 (regional index).

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