Philly Fed Manufacturing firms reported “signs of improvement” in June

Note: Be careful with diffusion indexes. This shows a rebound off the bottom – some improvement from May to June – but doesn’t show the level of activity.

From the Philly Fed: June 2020 Manufacturing Business Outlook Survey

Manufacturing conditions in the region showed signs of improvement this month, according to firms responding to the June Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments returned to positive territory, coinciding with the gradual reopening of the economy in our region and the nation more broadly. The employment index remained negative but increased for the second consecutive month. All future indicators improved, suggesting that the firms expect overall growth over the next six months.

The diffusion index for current general activity increased from -43.1 in May to 27.5 this month, its first positive reading since February (see Chart 1). Forty-six percent of the firms reported increases this month (up from 15 percent last month), while 19 percent reported decreases (down from 58 percent). … The firms continued to report decreases in employment on balance; however, the employment index increased 11 points.
emphasis added

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

These early reports suggest the ISM manufacturing index will show a rebound in June.