Global| May 15 2008Philadelphia Fed Index Recovered, Expectations Up Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The May Index of General Business conditions in the manufacturing sector, from the Philadelphia Federal Reserve Bank, rose to -15.6 and reversed all of its deterioration in April. The latest was the highest level this year. The [...]
The May Index of General Business conditions in the manufacturing sector, from the Philadelphia Federal Reserve Bank, rose to -15.6 and reversed all of its deterioration in April. The latest was the highest level this year.
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 new orders sub-index improved the most during May while shipments, inventories and employment also rose.
The prices paid index advanced 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 again rose sharply this month to a level of 28.2 from 13.7 in April. Expectations for each sub-component rose sharply and the overall series was at it's highest since last October.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found here.
| Philadelphia Fed (%) | May | April | May '07 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| General Activity Index | -15.6 | -24.9 | 4.1 | 5.1 | 8.1 | 11.5 |
| Prices Paid Index | 53.8 | 51.6 | 29.6 | 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.
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