Apart from this past November, it has been nearly a half-century since price hikes by manufacturers in the Philadelphia region were this widespread.
The Federal Reserve Bank of Philadelphia said its monthly manufacturing survey’s index of prices received rose to 54.4 in early March, with 57 percent of surveyed businesses saying they had raised their prices, thirty-eight percent saying prices were unchanged from a month before, and two percent saying they had cut prices.
Except for November of 2021, this was the highest reading for the measure of prices received since 1974. The highest ever reading was in February 1974, when the index hit 63.8. In November, the index rose to 62.9.
The index of prices paid for materials and components rose 12 points to 81.0, the highest since June of 1979. Eighty-seven percent of manufacturing businesses reported rising input prices, seven percent reported no change, and six percent costs had declined.
The survey polls manufacturing firms in the Third Federal Reserve District, which includes eastern Pennsylvania, southern New Jersey, and Delaware.
There were signs of growing demand in the survey, possibly creating even greater pricing pressures going forward. The diffusion index for current general activity rose 11 points to 27.4 this month, its highest reading since last November and above analyst forecasts. The indexes for current shipments and new orders indexes also rose to their highest readings since November.
Companies are still adding to payrolls despite a historically tight labor market. The employment index rose to 38.9, its highest reading ever. Nearly 44 percent of the firms reported increases in employment, compared with 5 percent that reported decreases. Forty-eight percent reported no change.
Companies were a bit less positive about the months ahead, with the future general activity index falling 5 points to 22.7. The Philly Fed noted that this remains slightly above its average over the past seven months. Almost 41 percent of the firms expect activity to increase over the next six months, while 18 percent expect activity to decrease. The future new orders index declined 3 points, and the future shipments index fell 14 points.
The measure of expectations for prices received six months from now rose more than 12 points from 53.3 to 68.5 to the highest level since 1981. The measure of expectations for prices paid jumped from 60.2 to 71.3.