Highlights
The Philadelphia Fed's report on its manufacturing sector, like the Empire State report posted earlier this morning, shows steep contraction in January but still less severe contraction than December. But unlike Empire State, the Philadelphia report shows an improvement, not deterioration, in the six-month outlook.

The Philadelphia Fed's January index for general business conditions came in at -24.3, up from an upwardly revised -36.1 in December (-32.9 initially reported). Both new orders and shipments are contracting but at slowing rates. One area unfortunately where contraction is deepening is employment where the number of employees index fell more than 10 points to -39.0 -- the single worst reading in the report. Price readings show steady and deep rates of deflation.

But gains were posted in the six-month outlook where the general business conditions index jumped nearly 18 points to 7.4. A comparison with the Empire State report shows a flip flop, that is gains in one for one month and losses in the other for the other month. Taking both together suggests that the six-month outlook is uncertain. But both reports do show an easing in deflationary expectations.

Today's regional manufacturing reports point to continued contraction for the nation's manufacturing sector in the first quarter and continued readings in the 30s for the ISM's manufacturing index to be issued at the beginning of February. Markets are showing no significant reaction.

Market Consensus Before Announcement
The general business conditions component of the Philadelphia Fed's business outlook survey index remained sharply negative in December - but not quite as severely as in November. The Philly Fed's general business conditions index pulled up somewhat to minus 32.9 from minus 39.3 in November. But contraction has been significant as this index has been at very negative levels for three months. New orders point to further weakness ahead as this index came in at minus 25.2. The unfilled orders index also remained significantly negative. Price pressures eased further as the prices paid index fell to minus 33.2 from minus 30.7 in November. Also, prices received dropped sharply to minus 37.8 from minus 15.5 the month before.

Philadelphia Fed survey Consensus Forecast for January 09: -35.0
Range: -41.3 to -23.7

2009 Release Schedule

Released On: 1/15 2/19 3/19 4/16 5/21 6/18 7/16 8/20 9/17 10/15 11/19 12/17 Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec