by Calculated Risk on 12/17/2009 10:00:00 AM

Manufacturing has been one of the bright spots for the economy beause of a combination of inventory restocking and increased exports - and the Philly Fed survey shows continued expansion in December. However, it appears the manufacturing boom is slowing - with the new orders index declining (although still positive) and the future activity index declining "notably".

Here is the Philadelphia Fed Index released today: Business Outlook Survey.

Activity in the region's manufacturing sector is expanding, according to firms polled for this month's Business Outlook Survey. Indexes for general activity, new orders, and shipments all remained positive this month. ...

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 16.7 in November to 20.4 this month. The index has now remained positive for five consecutive months (see chart). Other broad indicators suggest continued growth this month, but they fell somewhat from their November readings. The current new orders index, which has also remained positive for five consecutive months, decreased 8 points. The current shipments index fell less than 1 point. The current inventory index, although still negative, increased 10 points, to its highest reading in four months. Indicators for unfilled orders and delivery times edged higher and reached their highest readings since well before the recession began at the end of 2007.

Labor market conditions have been stabilizing in recent months, and for the first time since late 2007, more firms reported an increase in employment than reported declines. The current employment index increased 7 points, to its highest reading since October 2007. The workweek index edged four points higher, to 6.4, its second consecutive positive reading. ...

The future general activity index remained positive for the 12th consecutive month but decreased notably from 36.8 in November to 24.4, its lowest reading since March. The future activity index has been trending downward since mid-year. Indexes for future new orders and shipments declined this month, falling 15 points and 7 points, respectively.

Click on graph for larger image in new window.

This graph shows the Philly index for the last 40 years.

The index has been positive for five months now, after being negative for 19 of the previous 20 months.