Philadelphia Factory Activity Expands the Most in 6 Months

The Philadelphia Fed Manufacturing Index rose to 18.1 in March 2026, the highest since September 2025, from 16.3 in February and way better than analysts' forecasts of 10. This marked the third consecutive month in positive territory, indicating continued expansion in regional manufacturing. The index for current new orders fell 3 points to 8.6, while the current shipments index rose 22 points to 22.2, its highest reading since January 2025. The inventories index ticked up 2 points to 1.4. At the same time, the employment index returned to positive territory, up 2 points to 0.8, but continued to suggest mostly steady employment overall. Both price indexes rose this month after declining last month. The prices paid index rose 6 points to 44.7, while the prices received index rose 5 points to 21.2. Looking ahead, the firms continue to expect overall growth over the next six months.

The Philadelphia Fed Manufacturing Index rose to 16.3 in February 2026, the highest since September and above expectations of 8.5. General business activity and new orders remained moderately strong, but shipments slowed sharply and nearly stalled. Employment levels were mostly steady, yet the employment index turned slightly negative and the average workweek shortened. Prices continued to rise overall, although both input costs and selling prices increased at a slower pace than before. Customer price sensitivity stayed largely unchanged, though about a third of firms said customers are becoming more sensitive to price. Many firms still expect industry costs to change soon, and most anticipate competitors will raise prices within three months. Tariffs were reported to have had a mostly negative impact over the past year, and many firms expect continued negative effects. Expectations for growth over the next six months strengthened, though planned capital spending declined.

The Philadelphia Fed Manufacturing Index surged 21.4 points to 12.6 in January 2026, marking its highest level since September, as activity rebounded sharply from an upwardly revised -8.8 in December and far exceeded market expectations of -2. New orders rose to 14.4 and shipments increased to 9.5, signaling improved demand and deliveries, while inventories fell to -8.4, the lowest since July 2024. Employment remained positive at 9.7, though slightly lower than last month, and the average workweek edged down to 9.1. Input prices eased slightly, with the prices paid index dipping to 46.9, while the prices received index rose to 27.8, indicating ongoing cost pressures. Looking ahead, the future activity index slipped to 25.5, with future new orders falling to 32.9 and future shipments rising to 40.8. Firms continue to anticipate modest growth in employment and elevated prices over the next six months, reflecting cautious optimism amid sustained price pressures.