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Economy in Brief
U.S. Mortgage Applications Continued to Rise, but only Slightly
The Mortgage Bankers Association reported that mortgage applications edged up 0.7% w/w...
U.S. Consumer Confidence Deteriorates Further in June
The Conference Board's Consumer Confidence Index weakened 4.4% (-23.4% y/y) in June...
U.S. FHFA House Prices Continued to Rise in April
The FHFA House Price Index increased 1.6% during April...
U.S. Advance Trade Deficit Narrowed Slightly in May
The advance estimate of the U.S. international trade deficit in goods narrowed to $104.3 billion in May...
U.S. Energy Prices Decline
The AAA retail price of gasoline fell seven cents to $4.94 per gallon (+60.4% y/y) in the week ended June 24...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller October 23, 2018
The Federal Reserve Bank of Philadelphia reported that its Nonmanufacturing Business Index of current conditions at the company level declined to 37.2 during October and reversed its September improvement. Despite the fall in the overall index, a higher 53 percent of respondents reported an improvement in current activity while a greatly increased 16% reported a decline.
The expectations index for October declined to 43.9 and was at the bottom of the range in place since early last year. Fifty-nine percent of respondents reported improved expectations while 15 percent indicated a decline.
The components of the overall index all deteriorated. The new orders series plummeted to the lowest level in over three years and the unfilled orders series also fell markedly. The inventory index similarly more-than-reversed its recent strength. Moving down just slightly was the sales or revenue index, but it remained improved sharply versus twelve months earlier.
On the labor front, the number of full-time permanent employees index deteriorated sharply after reaching a record high in September. A greatly lessened twenty-six percent of companies added jobs while a moderately higher nine percent indicated reduction. The index of part-time/temporary employment fell moderately m/m, but remained in the upward trend in place during the last year. The average workweek reading continued to trend sideways as it was little changed m/m. The index of wage & benefit costs weakened sharply to the lowest level in six months.
The index of prices paid plummeted to the lowest level since June of last year. A greatly lessened 18% of respondents paid higher prices while a slightly higher three percent paid less. The prices received index also weakened m/m, but remained in its recent upward trend.
The index for capital spending on equipment & software stabilized after deteriorating sharply during the prior two months. The capital expenditures for facilities index weakened greatly to the lowest level in two years.
The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.
Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) | Oct | Sep | Aug | Oct'17 | 2017 | 2016 | 2015 |
---|---|---|---|---|---|---|---|
General Activity - Company | 37.2 | 46.8 | 41.1 | 25.0 | 27.3 | 19.7 | 31.3 |
New Orders | 7.8 | 26.7 | 29.0 | 23.6 | 12.5 | 15.7 | 21.8 |
Sales or Revenue | 41.3 | 42.8 | 40.5 | 27.4 | 27.9 | 16.2 | 23.8 |
Inventories | -1.5 | 13.9 | 9.5 | 1.3 | 3.8 | 4.4 | 5.2 |
Number of Full-Time Permanent Employees | 16.6 | 36.7 | 32.2 | 15.6 | 14.8 | 11.7 | 15.6 |
Prices Paid | 15.0 | 26.3 | 27.4 | 17.5 | 21.4 | 17.5 | 19.3 |
Wage & Benefit Costs | 41.9 | 48.1 | 46.4 | 38.3 | 33.4 | 31.2 | 32.5 |
Expected General Activity - Company | 43.9 | 53.6 | 50.7 | 41.7 | 49.9 | 43.0 | 53.8 |