by Calculated Risk on 5/19/2011 01:58:00 PM

Catching up ... from the Philly Fed this morning: May 2011 Business Outlook Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 18.5 in April to 3.9, its lowest reading since last October. [any reading above zero is expanion]. The demand for manufactured goods, as measured by the current new orders index, showed a similar slowing: The index fell 13 points while the shipments index declined 23 points; both remained positive, however, suggesting slight growth last month. For the first time in eight months, firms reported that unfilled orders and delivery times were falling — both indexes were slightly negative this month.

Firms’ responses continue to indicate overall improvement in the labor market despite weaker activity, orders, and shipments. The current employment index increased nearly 10 points and has now remained positive for eight consecutive months.

This indicates continued expansion in May, but at a sharply slower pace. This was well below the consensus of 20.0.

Click on graph for larger image in graph gallery.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through May. The ISM and total Fed surveys are through April.

This early reading suggests the ISM index will be in the mid 50s in May.

Note: It is possible that this survey was impacted by supply chain disruption issues related to the earthquake in Japan - but I didn't see any mention of it. Interesting that this is the fifth highest employment index since the survey began in 1968.

Earlier:
• April Existing Home Sales: 5.05 million SAAR, 9.2 months of supply
• MBA: Total Delinquencies essentially unchanged in Q1 Seasonally Adjusted
• Weekly Initial Unemployment Claims declines to 409,000, 4-Week average highest since November
• Existing Home Sales graphs