Report: Phila. manufacturing weak, but showing optimism

The Philadelphia region's manufacturing sector showed continued weakness this month but also showed a glimmer of optimism, according to a monthly report released this morning by the Philadelphia Federal Reserve.

The August Business Outlook Survey showed that all broad indicators improved marginally over July, but remained in negative territory for the ninth straight month.

Cost pressures remained, with almost two-thirds of firms reporting higher costs for raw materials this month, but this was down from 77 percent in July.

More than a third of the firms surveyed said that they had increased their own prices, the report said.

But manufacturers showed signs of optimism about the next six months.

The percentage of firms reporting a decrease in employment (18 percent) was slightly greater than the percentage reporting an increase (16 percent), but other areas - shipments, new orders, unfilled orders and delivery times, and employment and hours - showed varying degrees of improvement.

Based on special questions this month, 51 percent of the manufacturers said that, compared with last year, exports as a percentage of sales had increased; fewer than 2 percent reported a decrease.

When asked about outsourcing, 11 percent said that some operations had been moved abroad since the beginning of the year; 6 percent said that previously outsourced operations had been moved back to the United States over that period.

Mike Trebing, senior economic analyst for the Philadelphia Fed, said today that results of this months's survey - which reflected about 85 of the close to 2,000 manufacturers in the region - are in line with the national numbers. "We're not exactly the U.S. pattern, but pretty close to it," he said.