· The
May Index of General Business conditions in the manufacturing sector,
from the Philadelphia Federal Reserve Bank, rose to -15.6 and reversed
all of its deterioration in April. The latest was the highest level this
year.
· The Philadelphia Fed constructs a diffusion index for total business activity and each of the sub indexes. The business conditions index reflects a separate survey question, not the sub indexes listed below.
· During the last ten years there has
been a 59% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 42% correlation with q/q growth
in real GDP.
· The new orders sub-index improved the most during May while shipments, inventories and employment also rose.
· The prices paid index advanced sharply to its highest level since January 2005. During the last ten years there has been a 76% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
· The separate index of expected business conditions in six months again rose sharply this month to a level of 28.2 from 13.7 in April. Expectations for each sub-component rose sharply and the overall series was at it's highest since last October.
· The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found here.