Global| Mar 15 2012Philadelphia Fed Business Activity Index Moves Up
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank's General Business Conditions Index rose in March to its highest level since last April. The index rose to 12.5 from 10.2 in February and the figures have been positive for six consecutive months. [...]
The Philadelphia Federal Reserve Bank's General Business Conditions
Index rose in March to its highest level since last April. The index rose
to 12.5 from 10.2 in February and the figures have been positive for six
consecutive months. The latest reading beat Consensus expectations for
11.5 and it is consistent with the improved Empire State index. However,
Haver Analytics constructs an ISM-adjusted reading of the Philadelphia
number. Its m/m slip to 50.3 is not consistent with the improvement in the
adjusted Empire State figure. This happens frequently as there is not a
100% correlation between the two series. It has been 85% during the last
ten years, so there's precedent for errant monthly movement. Nevertheless,
both series indicate meaningful factory sector improvement versus last
year. 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.
Improvement in the overall index was contained to the inventories and employment series. During the last ten years, there has been an 84% correlation between the employment index level and the monthly change in manufacturing sector payrolls. Other series deteriorated m/m including orders, shipments, unfilled orders, delivery times and prices paid. A lessened twenty-four percent of firms paid higher prices while six 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 slipped to its lowest since October led by lower and employment.
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 (%) | Mar | Feb | Jan | Mar'10 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| ISM-Adjusted General Business Conditions | 50.3 | 51.2 | 50.7 | 60.0 | 51.9 | 50.7 | 41.2 |
| General Business Conditions | 12.5 | 10.2 | 7.3 | 39.2 | 7.7 | 12.1 | -7.6 |
| New Orders | 3.3 | 11.7 | 6.9 | 36.1 | 7.1 | 5.5 | -9.5 |
| Shipments | 3.5 | 15.0 | 5.7 | 31.7 | 9.9 | 8.3 | -7.9 |
| Unfilled Orders | -11.0 | 2.2 | -4.1 | 10.5 | -0.9 | -3.0 | -15.2 |
| Delivery Time | -7.1 | 1.5 | -3.8 | 5.8 | -0.4 | 0.9 | -15.2 |
| Inventories | 0.9 | -12.9 | -6.3 | 10.5 | -0.4 | -5.0 | -24.0 |
| Number of Employees | 6.8 | 1.1 | 11.6 | 16.5 | 11.0 | 4.6 | -23.8 |
| Prices Paid | 18.7 | 38.7 | 31.8 | 59.8 | 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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