Philly Fed Manufacturing firms reported “continued weakness” in May

From the Philly Fed: May 2020 Manufacturing Business Outlook Survey

Manufacturing firms reported continued weakness in regional manufacturing activity this month, according to results from the Manufacturing Business Outlook Survey. Despite remaining well below zero, the survey’s current indicators for general activity, new orders, shipments, and employment rose this month after reaching long-term low readings in April. The firms expect the current slump in manufacturing activity to last less than six months, as the broadest indicator of future activity strengthened further from last month’s reading; furthermore, the firms continue to expect overall growth in new orders, shipments, and employment over the next six months.

After reaching a 40-year low in April, the diffusion index for current general activity rose 13 points to -43.1, its third consecutive negative reading. The percentage of firms reporting decreases this month (58 percent) far exceeded the percentage reporting increases (15 percent). … The firms continued to report overall decreases in manufacturing employment this month, but the current employment index increased 31 points to -15.3.
emphasis added

This was well close to the consensus forecast. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through May), and five Fed surveys are averaged (blue, through April) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through April (right axis).

These early reports suggest the ISM manufacturing index will show significant contraction in May.