(Editor’s note: This report is provided by research conducted by the Federal Reserve Bank of Philadelphia)

December 2015

Regional nonmanufacturing activity remained positive in December, according to firms responding to this month’s Nonmanufacturing Business Outlook Survey. The diffusion index for current regional activity rose, while the index for current firm-level activity showed little change. The diffusion index for prices received fell, but the indicators for new orders, sales, and full-time employment increased. The responding firms continue to be optimistic about business activity at their own firms and in the region over the next six months.

Summary

The December Nonmanufacturing Business Outlook Survey results suggest increased activity among nonmanufacturing firms in the region. The company-level indicators remained in clearly positive ranges, and the respondents to the survey expressed optimism about future growth at their firms. Index readings for current and future general activity at the regional level remained positive as well.

Firms Reported Steady Activity

The diffusion index for current activity at the firm level fell slightly, from 26.3 in November to 25.5 in December, and remained near its historical average of 30.3. Forty-three percent of the respondents reported an increase in activity, while 39 percent reported no change, and 18 percent reported a decrease. The responding firms had a more positive assessment of regional conditions, as the diffusion index for general business activity for the region rose 9 points, to 35.3, this month. Only 10 percent of the firms reported that they observed a decrease in regional activity.

New Orders and Sales Improved

In December, the new orders index rose four points, to 19.6, and the sales/revenues index rose three points, to 25.5. These indexes are near their historical averages (20.4 for new orders and 23.5 for sales or revenues). The increase in the sales/revenues index was mainly due to a fall in the percentage of firms reporting a decline in sales (from 21 percent in November to 16 percent in December). One-third of the firms reported increases in new orders, unchanged from last month, while the percentage of firms that reported decreases in new orders fell from 18 percent in November to 14 percent in December.