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Economy in Brief

Philadelphia Fed Business Activity Index Improves
by Tom Moeller  October 18, 2012

The Philadelphia Federal Reserve Bank reported that its General Business Conditions Index rose to 5.7 this month after gaining to an unrevised -1.9 during September. The figure was the first positive number in six months and it beat expectations for 0.0. Haver Analytics constructs a seasonally adjusted figure comparable to the ISM index. It also gained to 46.6, its highest level in five months.

Monthly improvement amongst the component series was widespread. Higher readings for inventories, shipments, prices paid and unfilled orders led the rise. However, the employment figure fell to -10.7, its lowest level of the recovery. During the last ten years there has been an 83% correlation between the employment index and the m/m change in factory sector payrolls. In addition, the new orders and delivery times series deteriorated m/m.

Pricing power also improved m/m to its highest level in six months. During the last ten years there has been a 71% correlation between the prices paid index and three-month growth in the intermediate goods PPI.

The separate index of expected business conditions in six months deteriorated sharply m/m. New orders, shipments, unfilled orders, delivery times, and employment each fell sharply.

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 (%) Oct Sep Aug Oct'11 2011 2010 2009
ISM-Adjusted General Business Conditions 46.6 42.9 45.4 52.1 51.9 50.7 41.2
General Business Conditions 5.7 -1.9 -7.1 10.8 7.7 12.1 -7.6
  New Orders -0.6 1.0 -5.5 8.5 7.1 5.5 -9.5
  Shipments -0.2 -21.2 -11.3 13.6 9.9 8.3 -7.9
  Unfilled Orders -6.3 -8.2 -16.2 2.9 -0.9 -3.0 -15.2
  Delivery Time -15.9 -8.4 -12.2 0.1 -0.4 0.9 -15.2
  Inventories 2.1 -21.7 -6.9 0.0 -0.4 -5.0 -24.0
  Number of Employees -10.7 -7.3 -8.6 5.0 11.0 4.6 -23.8
  Prices Paid 19.0 8.0 11.2 23.5 38.6 28.8 -3.6
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