Global| Jan 17 2013Philadelphia Fed Business Activity Index Reverses Most Of Its December Improvement
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank reported that its General Business Conditions Index fell to -5.8 after improving to 4.6 during December, revised down from 8.1. Haver Analytics constructs a seasonally adjusted figure comparable [...]
The Philadelphia Federal Reserve Bank reported that its General Business Conditions Index fell to -5.8 after improving to 4.6 during December, revised down from 8.1. Haver Analytics constructs a seasonally adjusted figure comparable to the ISM index and it backpedaled to 46.4 from 49.8 in December, revised from 51.3. During the last ten years there has been an 85% correlation between the adjusted Philadelphia Fed index and the ISM Mfg. PMI Composite index.
Deterioration in the overall index was led by lower figures for new orders and shipments. The employment index also fell sharply. During the last ten years there has been an 80% correlation between the employment index and the m/m change in factory sector payrolls. To the upside were the readings for unfilled orders, delivery times and inventories, although each remained in negative territory.
Pricing power fell sharply to its lowest 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 added to its December gain and rose to the highest level since September. Higher readings for new orders and shipments led the increase, offset by declines in delivery times, prices paid and capital expenditures.
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 (%) | Jan | Dec | Nov | Jan'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| ISM-Adjusted General Business Conditions | 46.4 | 49.8 | 45.5 | 49.9 | 47.7 | 51.9 | 50.7 |
| General Business Conditions | -5.8 | 4.6 | -8.9 | 4.7 | -0.2 | 7.7 | 12.1 |
| New Orders | -4.3 | 4.9 | -4.7 | 9.0 | -0.1 | 7.2 | 5.5 |
| Shipments | 0.4 | 14.7 | -6.3 | 4.4 | -1.4 | 9.9 | 8.3 |
| Unfilled Orders | -1.0 | -2.0 | -5.7 | -5.2 | -6.5 | -0.9 | -3.0 |
| Delivery Time | -2.0 | -6.0 | -11.4 | -4.6 | -9.1 | -0.4 | 0.9 |
| Inventories | -6.5 | -7.8 | -9.6 | 7.2 | -6.0 | -0.3 | -4.9 |
| Number of Employees | -5.2 | -0.2 | -6.9 | 11.5 | 0.0 | 11.0 | 4.7 |
| Prices Paid | 14.7 | 23.5 | 27.9 | 27.1 | 17.6 | 39.3 | 29.0 |
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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