Global| Oct 19 2006Philadelphia Fed Index Remained Negative
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank's Index of General Business Conditions in the manufacturing sector remained negative in October. The figure slipped to -0.7 from an unrevised -0.4 last month and disappointed Consensus [...]
The Philadelphia Federal Reserve Bank's Index of General Business Conditions in the manufacturing sector remained negative in October. The figure slipped to -0.7 from an unrevised -0.4 last month and disappointed Consensus expectations for improvement to 6.5.
During the last ten years there has been a 65% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 49% correlation with q/q growth in real GDP.
Sharp deterioration into negative territory by the indexes for unfilled orders, delivery times and the average workweek presumably pulled the overall index down.
The sub indexes for orders, shipments and inventories each recovered sharply back into positive territory. The employment index fell moderately m/m but remained in the positive range of the last year. During the last ten years there has been a 75% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.
The prices paid index fell m/m to the lowest level since April. 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 improved sharply to the highest level since May.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found here.
| Philadelphia Fed Business Outlook | October | September | Oct. '05 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| General Activity Index | -0.7 | -0.4 | 13.1 | 12.4 | 28.0 | 10.5 |
| Prices Paid Index | 32.0 | 38.1 | 66.7 | 43.5 | 51.2 | 16.8 |
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.
