Global| Mar 20 2008Philadelphia Fed Index Improved Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank reported that for March, it's Index of General Business Conditions in the manufacturing sector improved slightly to -17.4, about as expected, from -24.0 in February. The latest level was still [...]
The Philadelphia Federal Reserve Bank reported that for March, it's Index of General Business Conditions in the manufacturing sector improved slightly to -17.4, about as expected, from -24.0 in February. The latest level was still near the lowest since the recession year 2001.
The Philadelphia Fed constructs a diffusion index for total business activity and each of the sub indexes. The business conditions index reflects a separate survey question, not the sub indexes listed below.
During the last ten years there has been a 59% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 42% correlation with q/q growth in real GDP.
The modest rise in the overall index reflected slight improvement in the new orders and in the shipments sub indexes. Unfilled orders, delivery times and inventories continued to fall, as did the employment index which fell to its lowest since 2003. During the last ten years there has been a 75% correlation between the employment index and the three-month growth in factory payrolls.
The prices paid index rose sharply to its highest level since January 2005. During the last ten years there has been a 76% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months rose and recovered most of a sharp February decline, but the index still remained negative. Expectations for new orders, shipments and for the number of employees each recovered some of the sharp February declines.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found here.
| March | February | March '07 | 2007 | 2006 | 2005 | |
|---|---|---|---|---|---|---|
| General Activity Index | -17.4 | -24.0 | 0.2 | 5.1 | 8.1 | 11.5 |
| Prices Paid Index | 54.4 | 46.6 | 27.6 | 26.4 | 36.6 | 40.1 |
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.
