U.S. Philly Fed survey may lead to economic rebound

The March survey is another shred of evidence suggesting the economy may rebound from the winter slowdown attributable to inclement weather.

The following chart shows the healthy rebound in the headline reading of general business activity. Its 15.3-point gain is the most since June and among the healthiest rebounds over the last three years (upper panel). The spurt in activity is also apparent in the change in the volume of new orders, which increased by 10.9-points. And while the overall reading for each index remains relatively slow, at face value the gain marks the first sign of spring. Also of encouragement for investors is the rebound in the average workweek, which is often a precursor for improvement in hiring conditions.

In this case the workweek index improved while the employment index continued to flash expansion although at a slightly slower pace than in February. Forward-looking conditions remained optimistic but slightly less so according to the six-month ahead part of the report. Its general business activity index eased to 35.4 from 40.2. Manufacturers expect a dip in what is still a healthy reading for new orders (down to 32.2 from 35.4) while the expected level of shipments rose to 41.1 from 36.0. Also of encouragement is the surge in capital expenditure intentions whose index advanced to 31.3 from 19.9 and to its strongest since March 2011.

General business activity and new orders jumped in March

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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