·
The Philadelphia Fed’s November index of
general business conditions in the manufacturing sector eased to 20.7
from 28.5. A decline to 23.2 had been the Consensus expectation.
· During the last ten years there has been a 71% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 53% correlation with q/q growth in real GDP.
· Most of the sub indexes declined with the notable exception of the index for the number of employees which rose to 17.4 and recovered most of the prior month's.
· The business conditions index reflects a separate survey question, not the sub indexes.
· The separate index of expected business conditions in six months reversed virtually all of the prior two months' declines with a 24.5 point jump to 52.1. That was still off the highs last year in the 60s.
· The prices paid index fell to 53.9.
Expectations for prices rose to the highest level since March. During
the last ten years there has been a 76% correlation between the prices
paid index and the three month growth in the PPI for intermediate goods.
The correlation with the finished goods PPI has been 41% and with the
CPI it's been 45%.
· The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
· The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found here.
· Today's comments by Fed Chairman Greenspan on the Euro can be found here.