Philly Fed Business Outlook Survey
This business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district of the United States. It is widely followed as an indicator of manufacturing sector trends. Most important is its correlation with the ISM manufacturing index and the index of industrial production.
Why is this important? By tracking economic data such as the Philly Fed survey, investors will get a picture of what the economic backdrop is for the various markets.
The Philly Fed survey gives a detailed look at the manufacturing sector’s course and speed. Since manufacturing is a major sector of the economy, this report has an influence on market behavior. Generally, change in manufacturing activity is positively correlated to change in currency demand.
Lastly, some of the Philly Fed sub-indexes provide insight on commodity prices and other clues on inflation (affecting fixed income). The bond market is highly sensitive to the Philly Fed Survey because it is released early in the month before other important indicators thus forming expectations that traders and investors act upon.