Philadelphia Federal Index Definition

The Philadelphia Federal Index (or Philly Fed Index) is a regional federal-reserve-bank index measuring changes in business growth. It is also known as the "Business Outlook Survey."

The survey is a measure of regional manufacturing growth. When the index is above zero, it indicates factory-sector growth, and when below zero, it indicates contraction.

The index is constructed from a survey of participants who voluntarily answer questions regarding the direction of change in their overall business activities. This index is typically published by the Philadelphia Federal Reserve Bank on the third Thursday of the month at 10 a.m. EST. It is considered to be a good gauge of general business conditions and may also be an indication of what to expect from the upcoming Purchasing Managers' Index.

The survey covers the Pennsylvania, New Jersey and Delaware region. Participants in the survey help indicate the direction of change in overall business activity at their plants as relates to factors such as employment, new and unfilled orders, inventories, as well as prices paid and received.

This monthly report often shares findings like from this example using November 2018 data. It stated as follows: "The diffusion index for current general activity decreased from 12.9 in November to 9.4 this month, its lowest reading since August 2016. Over 26 percent of the manufacturers reported increases in overall activity this month, while 17 percent reported decreases. The new orders index increased 5 points to 14.5 but remains notably lower than its average reading for the year."