Global| Dec 16 2010Philadelphia Fed Index Improves To Highest Since 2005
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank indicated that its December index of regional factory sector activity improved further to 24.3, its highest level since April 2005. The latest easily outpaced Consensus expectations for a m/m [...]
The Philadelphia Federal Reserve Bank indicated that its December index of regional factory sector activity improved further to 24.3, its highest level since April 2005. The latest easily outpaced Consensus expectations for a m/m pullback to 14.1 and it compares to readings near -40.0 at the recession's weakest.During the last ten years there has been an 76% 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 78% correlation with q/q growth in real GDP.
There was mixed improvement amongst the index components. New orders, delivery times, the workweek and inventories (slower delivery speeds) each firmed although shipments, inventories and employment each fell. The latter's decline was from it's highest since August 2007. During the last ten years, there has been a 75% correlation between the index level and the three-month change in manufacturing sector payrolls.
The prices paid index also improved sharply to its highest level since July 2008. Fifty-two percent of firms paid higher prices while just 0.7% paid lower. 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. There has been an 81% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months rose further to its highest level since March. Expectations for new orders, shipments, delivery times, prices paid, employment and capital expenditures rose.
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.
The figures from the Philadelphia Federal Reserve can be
found in Haver's SURVEYS database.
| Philadelphia Fed (%) | Dec | Nov | Oct | Dec'09 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| General Activity Index | 24.3 | 22.5 | 1.0 | 22.5 | 12.1 | -7.6 | -21.4 |
| New Orders | 14.6 | 10.4 | -5.0 | 8.3 | 5.4 | -9.7 | -14.7 |
| Shipments | 7.3 | 16.8 | 1.4 | 14.9 | 8.3 | -8.0 | -9.2 |
| Delivery Times | 8.5 | 2.1 | -0.3 | 4.1 | 0.9 | -15.3 | -10.6 |
| Number of Employees | 5.1 | 13.3 | 2.4 | 4.5 | 4.6 | -23.8 | -8.8 |
| Inventories | -2.0 | -5.9 | -18.6 | -5.7 | -5.1 | -24.0 | -16.7 |
| Prices Paid Index | 51.2 | 34.0 | 31.5 | 36.6 | 28.7 | -3.9 | 36.3 |
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.
