Global| Apr 19 2012Philadelphia Fed Activity Index Slips M/M but Shows Continued Growth
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank's General Business Conditions Index slipped last month to 8.5 from 12.5 in March. Nevertheless, positive numbers for the last seven months indicate expansion in activity. The latest reading was [...]
The Philadelphia Federal Reserve Bank's General Business Conditions Index slipped last month to 8.5 from 12.5 in March. Nevertheless, positive numbers for the last seven months indicate expansion in activity. The latest reading was lower than Consensus expectations for 12.0. Haver Analytics constructs an ISM-adjusted reading of the Philadelphia number. This figure rose to 52.4 this month, its highest level since November. During the last ten years there's been a 73.0% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There's also been a 76% correlation with q/q growth in real GDP.
Monthly changes were varied amongst the component series. To the downside were the figures for new orders, shipments and the length of the workweek. Improving were the readings for unfilled orders, inventories, delivery times and employment. During the last ten years there has been an 86% correlation between the employment figure and the m/m change in factory sector payrolls. Also improving slightly was the reading of prices paid. Twenty-seven percent of firms paid higher prices while five percent paid less. 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 improved slightly. That made up a March decline but the figure remained well below its January high.
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 (%) | Apr | Mar | Feb | Apr'10 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| ISM-Adjusted General Business Conditions | 52.4 | 50.3 | 51.2 | 55.6 | 51.9 | 50.7 | 41.2 |
| General Business Conditions | 8.5 | 12.5 | 10.2 | 15.1 | 7.7 | 12.1 | -7.6 |
| New Orders | 2.7 | 3.3 | 11.7 | 15.3 | 7.1 | 5.5 | -9.5 |
| Shipments | 2.8 | 3.5 | 15.0 | 25.2 | 9.9 | 8.3 | -7.9 |
| Unfilled Orders | 3.2 | -11.0 | 2.2 | 10.2 | -0.9 | -3.0 | -15.2 |
| Delivery Time | -3.4 | -7.1 | 1.5 | 7.4 | -0.4 | 0.9 | -15.2 |
| Inventories | 8.2 | 0.9 | -12.9 | 1.5 | -0.4 | -5.0 | -24.0 |
| Number of Employees | 17.9 | 6.8 | 1.1 | 14.0 | 11.0 | 4.6 | -23.8 |
| Prices Paid | 22.5 | 18.7 | 38.7 | 54.4 | 38.6 | 28.8 | -3.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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