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Economy in Brief
U.S. Housing Affordability Declines Further in June
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U.S. Producer Prices Fall During July; Core Increase Weakens
The Producer Price Index for Final Demand fell 0.5% during July...
U.S. Unemployment Claims Continue on an Uptrend
Initial claims for unemployment insurance filed in the week ended August 6 rose 14,000 to 262,000...
RICS Survey Points to More U.K. Housing Sector Weakness
The survey of housing market conditions in the U.K. continues to show strength in prices versus weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller August 16, 2007
The Philadelphia Federal Reserve Bank's Index of General Business Conditions in the manufacturing sector fell more than expected during August. The drop to 0.0 from 9.2 indicated that activity was "steady," but Consensus expectations had been for a reading that was roughly unchanged from July at 10.
During the last ten years there has been a 65% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 43% correlation with q/q growth in real GDP.
The sub indexes for new orders, shipments, unfilled orders and inventories all fell, the latter two into negative territory. The employment reading, however, improved to its best reading since 2004. During the last ten years there has been a 75% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.
The prices paid index fell for the third consecutive month, back to its lowest level since January. 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 rose to its best level since late in 2004.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found here.
The latest Survey of Professional Forecasters from the Federal Reserve Bank of Philadelphia can be found here.
Philadelphia Fed Business Outlook | August | July | Aug. 06 | 2006 | 2005 | 2004 |
---|---|---|---|---|---|---|
General Activity Index | 0.0 | 9.2 | 12.6 | 8.1 | 11.5 | 28.1 |
Prices Paid Index | 15.4 | 28.1 | 46.6 | 36.6 | 40.1 | 51.2 |