Philly FED Non-Manufacturing Shows Recovery This Month

Posted Wednesday, June 24, 2020 by
Skerdian Meta • 1 min read

The manufacturing and services sector fell into the deepest contraction ever during the last few months in the US, same as around the globe. Philadelphia FED non-manufacturing index also showed that this sector fell down the hole.

But, it is making a remarkable reversal this month as business activity climbed from -68 points to -3.6 points. Below is the report for June:

Philadelphia FED Non-Manufacturing Index for June 2020

  • Philly FED business activity index -3.6 in June vs. -68.6 in May
  • Full-time employment index my 13.3 in June vs. -23.4 in May
  • New orders index -12.6 in June vs. -32.4 in May
  • Wage and benefit costs index -3.5 in June vs. -14.9 in May
  • Firm level business activity index 7.3 in June vs. -41.4 in May

Business activity is not yet out of the woods, but it’s close to it, while full time employment is increasing. New orders and wage costs also improved but they are still negative. However, the firm level activity has turned positive, so the other sub-components should turn negative as well next month. FED’s Bullard was also speaking on Bloomberg a while ago:

FED’s Bullard Speaking on Bloomberg TV

  • Fed has deployed a lot of tools in virus response
  • More questions than answers around yield curve control
  • Fed is providing great forward guidance a moment
  • Keep an eye on asset bubble risks
  • Not seeing risk on a scale of tech bubble or mid to thousands
  • Fed retains credibility around its 2% inflation goal
  • Shutdown creates questions on inflation measurement
  • Markets have probably priced in the bank dividend move
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