Manufacturing activity in the Philadelphia Federal Reserve district remained firmly in expansion territory in September, but the pace eased from August while manufacturers reported a renewed rise in price pressures.
The Federal Reserve Bank of Philadelphia said its current general activity index fell to 37.8 in September from 47.4 in August, a decline of 9.6 index points. The September Manufacturing Business Outlook Survey was released September 17 at 8:30 a.m. ET and reflects responses collected from September 7 through September 15.
The decline does not mean manufacturing activity contracted. The Philadelphia Fed index is a diffusion index, not a percentage change in production. It is calculated from the share of manufacturers reporting an increase minus the share reporting a decrease, after seasonal adjustment.
A reading above zero therefore indicates that more firms reported improving conditions than worsening conditions. In September, 45.3% of responding firms reported increased general activity, compared with 7.5% reporting decreases, while 45.1% reported no change. The resulting 37.8 index remained strongly positive even after retreating from August.
The underlying activity measures were also resilient. New orders slipped only slightly to 29.2 from 30.1, while the shipments index was unchanged at 27.7. Price measures, however, moved notably higher.
- Prices paid: 48.6, up from 40.9
- Prices received: 31.3, up from 17.7
- Future prices paid: 71.3, up from 62.9
- Future prices received: 72.3, up from 59.8
The 7.7-point increase in prices paid and 13.6-point increase in prices received are Investozora calculations based on the Philadelphia Fed’s published August and September indexes.
Nearly 51% of manufacturers reported paying higher input prices during September, while only 1.9% reported declines. On the selling-price side, 32.6% reported raising the prices of their own products, compared with 21.1% in August. The Philadelphia Fed said the prices-received index reached its highest level since April.
That price acceleration stands out because other recent manufacturing indicators have shown a mixed national picture. Investozora recently reported that U.S. industrial production stalled as manufacturing fell 0.3%, while the New York Fed factory gauge also showed rising price pressures.
Employment also cooled sharply in the Philadelphia survey. The number-of-employees index dropped to 11.8 from 27.9, a 16.1-point decline by Investozora’s calculation. Only 17.3% of firms reported adding workers, down sharply from 32.8% in August, while 77.1% reported no employment change.
Manufacturers nevertheless remained optimistic about the coming six months. The future general activity index stood at 52.9, with 57.9% of firms expecting activity to rise. That was down substantially from August’s unusually high 73.6 reading, but it remained firmly positive. Future employment expectations strengthened to 50.6.
The survey’s special questions also showed that 68% of manufacturers expected third-quarter production to exceed second-quarter levels, versus 16% expecting a decline. The median reported capacity-utilization range remained at 70% to 80%.
The Philadelphia survey covers manufacturing firms in the Federal Reserve’s Third District—Delaware, southern New Jersey, and eastern and central Pennsylvania so it should not be treated as a direct measure of nationwide manufacturing output. Its value is as a timely measure of whether participating regional manufacturers are seeing conditions improve or deteriorate.
The next Philadelphia Fed Manufacturing Business Outlook Survey is scheduled for October 15, 2026, at 8:30 a.m. ET. That report will show whether September’s rise in input and selling-price indexes persists while regional manufacturing activity remains in expansion territory.
