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US DATA: Traces Of Election Influence On Philly Fed Future Readings (2/2)

US DATA
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At first glance the exuberance over future activity seen in the Philly Fed manufacturing survey appears to be election-related to at least some degree: the survey was conducted Nov 11-18 (after the Nov 5 election). 

  • Recall that the Empire State Manufacturing survey for November showed the highest activity rate since December 2021, with the survey conducted between Nov 4 and Nov 12 pointing to a potential election effect. However, the Empire outlook for future activity actually edged down, in contrast to the Philly Fed's.
  • Looking at the history of the series as well, it's hard to draw the conclusion that the Philly numbers are purely election-related. November's jump in the future general activity index isn't even as big as October's (19.9 vs 20.9 points), and optimism has clearly been trending higher since the start of the year, well before the election.
  • As such the simplest explanation is simply that regional manufacturers see stronger activity ahead versus an extended fallow period. Optimism hasn't quite translated into actual improvements in current business conditions in this recovery cycle - the first big jump was in March 2024 and we still haven't seen activity improve 8 months later. But it certainly doesn't look like a renewed downturn is imminent.
  • More troubling perhaps is the resurgence in price expectations, both received and, to a greater extent, paid (as noted in previous note, highest since Apr 2022).
  • There may be an element of tariff concern here post-election, though in November 2016 as Trump was elected for the first time, price expectations actually dipped. It wasn't until late 2017, ahead of the wide-ranging tariffs introduced by the Trump administration in 2018, that expected prices paid jumped above the 60.0 level which is where the indicator now stands.
  • Either way, the rise in the price expectations diffusion index since early 2023 has been substantial, in both the Philly and Empire surveys - consistent with the reacceleration in core goods prices that we have begun to see, and expect to see more of in the months ahead.
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At first glance the exuberance over future activity seen in the Philly Fed manufacturing survey appears to be election-related to at least some degree: the survey was conducted Nov 11-18 (after the Nov 5 election). 

  • Recall that the Empire State Manufacturing survey for November showed the highest activity rate since December 2021, with the survey conducted between Nov 4 and Nov 12 pointing to a potential election effect. However, the Empire outlook for future activity actually edged down, in contrast to the Philly Fed's.
  • Looking at the history of the series as well, it's hard to draw the conclusion that the Philly numbers are purely election-related. November's jump in the future general activity index isn't even as big as October's (19.9 vs 20.9 points), and optimism has clearly been trending higher since the start of the year, well before the election.
  • As such the simplest explanation is simply that regional manufacturers see stronger activity ahead versus an extended fallow period. Optimism hasn't quite translated into actual improvements in current business conditions in this recovery cycle - the first big jump was in March 2024 and we still haven't seen activity improve 8 months later. But it certainly doesn't look like a renewed downturn is imminent.
  • More troubling perhaps is the resurgence in price expectations, both received and, to a greater extent, paid (as noted in previous note, highest since Apr 2022).
  • There may be an element of tariff concern here post-election, though in November 2016 as Trump was elected for the first time, price expectations actually dipped. It wasn't until late 2017, ahead of the wide-ranging tariffs introduced by the Trump administration in 2018, that expected prices paid jumped above the 60.0 level which is where the indicator now stands.
  • Either way, the rise in the price expectations diffusion index since early 2023 has been substantial, in both the Philly and Empire surveys - consistent with the reacceleration in core goods prices that we have begun to see, and expect to see more of in the months ahead.