Global| Nov 20 2014Philadelphia Fed Business Conditions Index Rebounds; Nears 1993 High
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank reported that its General Factory Sector Business Conditions Index for November jumped to 40.8 from 20.7 in October. The figure was the highest since December 1993 and surpassed expectations for [...]
The Philadelphia Federal Reserve Bank reported that its General Factory Sector Business Conditions Index for November jumped to 40.8 from 20.7 in October. The figure was the highest since December 1993 and surpassed expectations for 18.3 in the Action Economics Forecast Survey. The seasonally adjusted figure, constructed by Haver Analytics, jumped to 59.5, the highest level since July, 2004. 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 new orders and shipment components led the way upward, followed by the delivery time and employment indicators. This latter series rose to its highest level since May, 2011. During the last ten years there has been a 79% correlation between the employment index level and the m/m change in factory sector employment. Weakening m/m were unfilled orders and inventories.
Pricing power weakened sharply to its lowest level since April. A lessened 21 percent of respondents paid higher prices while a higher 4 percent paid less. 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 twelve months improved to the highest level in three months. Movement amongst the component series was mixed.
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) | Nov | Oct | Sep | Nov'13 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| ISM-Adjusted General Business Conditions | 59.5 | 55.6 | 56.0 | 53.4 | 50.0 | 47.8 | 52.0 |
| General Factory Sector Business Conditions | 40.8 | 20.7 | 22.5 | 9.2 | 6.4 | -0.2 | 7.7 |
| New Orders | 35.7 | 17.3 | 15.5 | 14.0 | 7.3 | -0.1 | 7.2 |
| Shipments | 31.9 | 16.6 | 21.6 | 7.8 | 7.1 | -1.3 | 9.9 |
| Unfilled Orders | 7.1 | 11.6 | 5.0 | -4.6 | -3.8 | -6.5 | -0.9 |
| Delivery Time | 5.8 | 0.6 | 3.8 | 0.7 | -4.0 | -9.1 | -0.4 |
| Inventories | 10.0 | 14.8 | 6.1 | 13.9 | -3.2 | -6.0 | -0.3 |
| Number of Employees | 22.4 | 12.1 | 21.2 | 2.2 | 1.5 | 0.1 | 11.0 |
| Prices Paid | 17.3 | 27.6 | 27.0 | 25.4 | 16.7 | 17.7 | 39.3 |
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.
