The Philadelphia Federal Index (or Philly Fed Index) is a regional central bank index that measures changes in business growth spanning the Pennsylvania, New Jersey, and Delaware regions.
When Philadelphia’s federal index is above zero, it indicates growth in the manufacturing sector, and when below zero, it indicates contraction.
Also known as the “Manufacturing Business Outlook Survey,” a bullish index is often a sign that a bull market is on the horizon.
The intent of the survey is to provide a snapshot of current industrial activity in this region, as well as to provide a short-term forecast of manufacturing conditions in the area, which may give an indication of prevailing conditions throughout the United States. It is also known as the Philadelphia Fed Index.
Although there is contrary evidence of the strength of the predictive power of this survey, its publication may affect the capital markets, since it is commonly cited by the media and referred to by investment professionals and economists.