Philly Fed solid but with rising prices

Following an in line NY manufacturing survey on Tues, the Feb Philly Fed # was well above expectations at 35.9 vs the consensus of 21. It’s up from 19.3 in Jan and the best since Jan ’04. The components however were mixed as the headline figure is not a sum of its parts. New Orders were little changed, albeit at a still healthy level but Backlogs rose 6 pts. Employment rose 6 pts to the highest since ’73 but measures the direction of change, not the degree. A great thing to see nonetheless. The average workweek rose 2 pts and Inventories fell 4.7 pts. As has been seen, the manufacturing strength came with rising inflation pressures as Prices Paid rose 13 pts to the most since July ’08 and Prices Received rose 4 pts to the highest since Aug ’08. The increase specifically in input prices “continued to be widespread.” The overall 6 month outlook fell for a 3rd month, by 3 pts to a 4 month low as expectations for higher inflation rose.

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