Global| Jun 18 2010Philadelphia Fed Index: Rate of Business Expansion Slows
by:Tom Moeller
|in:Economy in Brief
Summary
According to the Philadelphia Federal Reserve Bank, the economic recovery continued this month but its rate of expansion slowed. The Bank's June index of regional factory sector activity slipped to 8.0 from 21.4 during May. The latest [...]
According to the Philadelphia Federal Reserve
Bank, the economic recovery continued this month but its rate of
expansion slowed. The Bank's June index of regional factory sector
activity slipped to 8.0 from 21.4 during May. The latest was well short
of expectations for a reading of 20.0 and it was the lowest figure
since last August. Nevertheless, it compared to readings near -40.0 at
the recent 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. The latest survey from the Philadelphia Federal Reserve Bank can be found here.
Accompanying the deterioration in the General Activity Index were weaker shipments and much weaker employment & hours readings. 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 fell sharply to the lowest level since last August. 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 improved modestly m/m but remained well below its earlier high. Expected prices paid also fell to the lowest level since last August. In addition, expected capital expenditures were down m/m to the lowest since September and remained well below the February high.
The figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS database.
Remarks on "The Squam Lake Report: Fixing the Financial System" by Federal Reserve Chairman Ben S. Bernanke can be found here.
| Philadelphia Fed (%) | June | May | April | June '09 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| General Activity Index | 8.0 | 21.4 | 20.2 | -5.0 | -7.6 | -21.4 | 5.0 |
| New Orders | 9.0 | 6.1 | 13.9 | -8.8 | -9.7 | -14.7 | 6.9 |
| Shipments | 14.2 | 15.8 | 5.6 | -0.2 | -8.0 | -9.2 | 9.9 |
| Delivery Times | 6.8 | -1.2 | 5.4 | -18.5 | -15.3 | -10.6 | -6.1 |
| Number of Employees | -1.5 | 3.2 | 7.3 | -24.1 | -23.8 | -8.8 | 6.8 |
| Inventories | 4.6 | -7.9 | 2.0 | -18.0 | -24.0 | -16.7 | -3.7 |
| Prices Paid Index | 10.0 | 35.5 | 42.7 | -17.4 | -3.9 | 36.3 | 26.3 |
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.
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