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Economy in Brief
U.S. Mortgage Applications Continue to Weaken
The MBA Loan Applications Index fell 1.2% (-54.5% y/y) in the week ended May 20...
German Climate Reading Continues to Skid Toward the Abyss
Germany's GfK consumer climate reading improved ever so slightly in June...
U.S. New Home Sales Plunge in April as Prices Jump
The new home sales market is unraveling...
U.S. Energy Prices Rise Further
Retail gasoline prices increased to $4.59 per gallon in the week ended May 23...
S&P Flash PMIs Are Mixed in May As Manufacturing Erodes Slowly
Among the early reporting countries in Europe and Japan, the S&P PMI readings for May tilt toward weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
State Coincident Indexes in April 2022
State Labor Markets in April 2022
Profits & Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation and Fed Policy: A Relationship which Should Worry the Fed and Scare Investors
by Tom Moeller June 21, 2012
Another sign of economic weakening came today from the Philadelphia Federal Reserve Bank. Its General Business Conditions Index fell sharply this month to -16.6 from an unrevised -5.8 in May and compared to an expected 0.5. The figure was the second consecutive negative reading and the most negative since August. Haver Analytics constructs a seasonally adjusted figure comparable to the ISM index. It slumped more than five points to 43.1, its lowest reading since July 2009.
Declines in the component series were all inclusive except for the number of employees, which rose slightly to 1.8 but remained well below the April high of 17.9. During the last ten years there has been an 83% correlation between the employment index and the m/m change in factory sector payrolls. The sharpest component series declines were logged by shipments, orders, inventories and the length of the workweek. Lesser declines were unfilled orders and delivery times.
Pricing power evaporated as the prices paid index dropped sharply into negative territory to its lowest level since July 2009.During the last ten years there has been a 70% correlation between the prices paid index and the three-month growth in the intermediate goods PPI.
The separate index of expected business conditions in six months ticked up to 19.5 from its lowest since August of last year. New orders, shipments, employment and capital expenditures led the rise.
The survey panel consists of 150 manufacturing companies in Federal Reserve District III (consisting of southeastern PA, southern NJ and Delaware.) The diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease in activity. The figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS database. The Consensus expectations figure is available in AS1REPNA.
Philadelphia Fed (%) | Jun | May | Apr | Jun'11 | 2011 | 2010 | 2009 |
---|---|---|---|---|---|---|---|
ISM-Adjusted General Business Conditions | 43.1 | 48.6 | 52.4 | 45.8 | 51.9 | 50.7 | 41.2 |
General Business Conditions | -16.6 | -5.8 | 8.5 | -4.1 | 7.7 | 12.1 | -7.6 |
New Orders | -18.8 | -1.2 | 2.7 | -6.5 | 7.1 | 5.5 | -9.5 |
Shipments | -16.6 | 3.5 | 2.8 | 2.8 | 9.9 | 8.3 | -7.9 |
Unfilled Orders | -16.3 | -9.4 | 3.2 | -13.3 | -0.9 | -3.0 | -15.2 |
Delivery Time | -15.5 | -14.0 | -3.4 | -14.9 | -0.4 | 0.9 | -15.2 |
Inventories | -8.7 | 4.5 | 8.2 | -10.4 | -0.4 | -5.0 | -24.0 |
Number of Employees | 1.8 | -1.3 | 17.9 | 3.1 | 11.0 | 4.6 | -23.8 |
Prices Paid | -2.8 | 5.0 | 22.5 | 32.8 | 38.6 | 28.8 | -3.6 |