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First Cut: Philadelphia Fed’s activity index suggests service sector is rolling along nicely

The Philadelphia Fed’s regional business conditions index for May slipped to 17.3 from 21.0 in April and 21.7 in March. The decrease is small and the underlying middling expansion for the region’s service sector appears fairly stable. If index levels are off significantly from the heated pace that dominated most of 2018, these are still respectable readings that suggest conditions are more normal and activity healthy.

The index for six months from now rose to 37.8 in May from 29.5 in April, its highest reading since November 2018 when the index was 50.7 and at a near-term peak.


The subindexes of the survey point to a strong labor market with rising full-time employment outpacing that for part-time, wages and benefits gaining steadily and firmly, and the average workweek continuing to expand.

Prices paid and prices received reflected higher energy costs and greater power to pass on increased costs.


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