Philly Fed CAPEX Index

The Philadelphia Fed future capital expenditures index is the six-month-ahead capital spending plans series of the Manufacturing Business Outlook Survey (MBOS). It is published by the Federal Reserve Bank of Philadelphia and covers owners, chief executives, and plant managers in the Third District. The District includes Delaware, southern New Jersey, and eastern and central Pennsylvania. The survey began in May 1968 and runs monthly.

Arabic outlets list the parent survey as the Philadelphia manufacturing index (monthly). This index differs from the current general business activity index, the headline of the survey. Coverage stays limited to District factories, though the District has historically served as a reasonable proxy for United States manufacturing. Values range from -100 to 100 and show direction and breadth only, not the size of change.

Responses are usually collected over an 8-day period that closes the Monday before publication. Results are usually published at 8:30 a.m. ET on the third Thursday of each month, barring holidays. The text file appears first, followed by supporting files and pages.

Each release also brings report text with charts, a PDF version, and a Summary of Returns table with shares and indexes. Historical data files and occasional special questions round out the release.

Seasonally adjusted history is revised once a year in January to update seasonal factors. The resulting changes to past years are typically minor. Revised files appear one week before the January release. Non-seasonally-adjusted shares for a published month are not revised afterward.

The index has no weighted components and rests on one forward-looking question. It moves with the gap between the increase and decrease shares.

• Increase: the share of firms expecting higher own capital spending over the next 6 months versus the current month.
• No change: the share expecting steady spending. It does not enter the formula but affects interpretation.
• Decrease: the share expecting lower own capital spending over the next 6 months versus the current month.

In the April 16, 2020 release, with responses collected from April 6 to April 13, 2020, current conditions collapsed to historic lows during the pandemic. Current general activity fell to -56.6, new orders to -70.9, shipments to -74.1, and employment to -46.7.

Expectations still stayed elevated. Future general activity rose 8 points to 43.0. Future capital spending plans held steady at 12.4 against 12.0 a month earlier, after a notable March drop.

The spending components were 28.2% increase, 41.1% no change, and 15.9% decrease. Every current-month capital spending cell read --, since the index has no current version. The lesson is that six-month plans can run fully against the present, so reading it as current spending flips the signal.

1. Response shares: compute the raw percentages of respondents answering increase, no change, and decrease.
2. Seasonal factors: adjust each share separately with United States Census X-12 factors, recomputed each January, then build the index from the adjusted shares.
3. Formula: subtract the seasonally adjusted decrease share from the seasonally adjusted increase share, leaving no change out. For example, 40% minus 15% gives 25.0.
4. Scale and zero: results range from -100 to 100, and zero means equal increase and decrease shares. A 13.0 can come from 13% increase, 0% decrease, and 87% no change, or from 53%, 40%, and 7% in the same order.