Global| Sep 17 2015Philadelphia Fed Business Conditions Index Backpedals
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank reported that its General Factory Sector Business Conditions Index for September deteriorated to -6.0 following an unrevised improvement to 8.3 in August. It was the first negative reading since [...]
The Philadelphia Federal Reserve Bank reported that its General Factory Sector Business Conditions Index for September deteriorated to -6.0 following an unrevised improvement to 8.3 in August. It was the first negative reading since February of 2014. Expectations were for +6.0 in the Action Economics Forecast Survey. The seasonally adjusted figure constructed by Haver Analytics declined to 51.0 following its improvement to 52.6 in August. It is comparable to the ISM Composite index. During the last ten years, there has been a 71% correlation between the adjusted Philadelphia Fed index and real GDP growth.
The components of the overall index were mixed this month with shipments, unfilled orders and inventories each deteriorating m/m. The employment measure, however, improved to its highest point since April. During the last ten years, there has been an 81% correlation between the jobs index and the m/m change in manufacturing payrolls. The new orders and delivery time series also improved, the latter showing the slowest product delivery speeds since April.
On the pricing front, the prices paid index deteriorated to its lowest reading since May. Sixteen percent of respondents, up from 13%, paid higher prices, while 15% paid less, up from 7%. The prices received measure eased along with expected prices.
The future business activity index improved to its highest level since January led by shipments, delivery times, the average workweek and capital expenditures. All other component series eased.
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 ISM adjusted figure, calculated by Haver Analytics, is the average of five diffusion indexes, new orders, production, employment, supplier deliveries and inventories with equal weights (20% each). Each diffusion index is the sum of the percent responding "higher" and one-half of the percent responding "same."
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 (%, SA) | Sep | Aug | Jul | Sep'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| ISM-Adjusted General Business Conditions | 51.0 | 52.6 | 49.2 | 55.3 | 53.7 | 50.0 | 47.8 |
| General Factory Sector Business Conditions | -6.0 | 8.3 | 5.7 | 18.6 | 18.6 | 6.4 | -0.2 |
| New Orders | 9.4 | 5.8 | 7.1 | 13.1 | 15.0 | 7.2 | -0.1 |
| Shipments | 14.8 | 16.7 | 4.4 | 20.0 | 16.4 | 7.1 | -1.3 |
| Unfilled Orders | -6.6 | -1.0 | -6.3 | 3.7 | 3.3 | -3.8 | -6.5 |
| Delivery Time | 0.5 | -0.4 | -4.5 | 3.0 | 0.7 | -4.0 | -9.1 |
| Inventories | -2.7 | 0.2 | -5.7 | 6.0 | 1.8 | -3.4 | -6.0 |
| Number of Employees | 10.2 | 5.3 | -0.4 | 19.5 | 10.6 | 1.5 | 0.1 |
| Prices Paid | 0.5 | 6.2 | 20.2 | 24.4 | 21.7 | 16.6 | 17.7 |
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.
