U.S. Data Pulse: Philadelphia Fed: Manufacturing Momentum Strengthens Further

Research evidence excerpt

U.S. Data Pulse: Philadelphia Fed: Manufacturing Momentum Strengthens Further

UpdateM

Manufacturing Momentum Strengthens Further

Manufacturing activity was strong in July, according to the Federal Reserve Bank of

Philadelphia’s Manufacturing Business Outlook Survey. The headline general business

activity diffusion index rose 31.1 points to 41.4 in July, well above its 6-month average of

13.9.

Demand and production showed strength. The shipments index grew 18.8 points to 33.7,

marking an eighth consecutive month of growth. Meanwhile, the new orders index

increased 9.7 points to 37, pointing to strong demand. The shipments index averaged 17.9

and 10.7 in 2Q26 and 1Q26, versus 9.3 in 2025. At the same time, the new orders index

reached its highest level since December 2021. The two indices highlight the continuing

momentum in the manufacturing sector, though given the strong readings in July, we

expect some moderation in August.

Labor demand from manufacturers showed signs of improvement. The employment index

grew to 10 from 7.9, and the average workweek index also rose to 14 from -6.5.

Supply chain & inventories: Delivery times lengthened significantly, which is not

surprising given the strong demand signal. The delivery times index moved up to 9.6 from

-2.6, meaningfully higher than its averages of 5.4 and 1.2 in 1Q26 and 4Q25. Inventories

increased, with the index rising 8.8 points to 0.3. The divergence between rising

inventories and longer delivery times is more consistent with strong demand than with

supply chain pressures, as supply disruptions would typically constrain inventory

accumulation.

Prices: Prices paid accelerated slightly whereas prices received accelerated strongly. Both

indices remained meaningfully higher than they were two years ago.