The Philadelphia Fed’s gauge of the manufacturing sector unexpected surged higher in October, soaring beyond typical prepandemic levels.
The Philly Fed’s manufacturing index jumped to 32.3 in October from 15 in September. Economists had expected the index to slide to 13.5.
The Philly Fed said the results indicate “widespread optimism” about the next six months.
This is not just the highest reading since the pandemic, it is one of the highest readings of the entire Trump administration and far above the historical average for the index.
The index, which is compiled each month by the Federal Reserve Bank of Philadelphia from surveys of manufacturers in the region, has only exceeded 30 eight times between 2010 and now. Six of those were in three years of the Trump administration prior to the pandemic, a reflection of the Trump administration’s policies that strengthened manufacturing in the U.S.
This was the fifth consecutive month of improvement for the general current activity measure.
The survey’s current indicators for new orders and and shipments also improved. Most future indexes increased and continue to reflect optimism among firms about growth over the next six month, the Philly Fed said.
The new orders gauge registered a record high in data going back to 1968.
On balance, firms reported increased employment for month, the fourth straight month of rising employment. The number of firms reporting increased employment, however, slipped. Plans for future hiring hit the highest level in 12 years.
The Philly Fed also asked manufacturers about their plans for capital spending over the next year.
“For all five categories of investment spending (software, noncomputer equipment, computer equipment, structure, and energy-saving investments), the share of firms expecting to increase spending was higher than the share of firms expecting to decrease spending. On balance, the firms expect larger increases for software and noncomputer equipment,” the Philly Fed said.
The survey covers businesses in the eastern two-thirds of Pennsylvania, southern New Jersey, and Delaware.