Global| Jul 16 2009Philadelphia Fed Index Remains Somewhat Weak
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the [...]
The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the manufacturing sector at -7.5 versus -2.2. However, both figures were materially improved from the lows of this past winter. Consensus expectations had been for a July reading of -5.0.
During the last ten years there has been a 77% 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 70% correlation with q/q growth in real GDP. The latest survey from the Philadelphia Federal Reserve Bank can be found here.
Amongst the components, both the shipments and employment indexes turned lower month-to-month but remained up from the March-April lows. During the last ten years there has been a 79% correlation between the index level and the m/m change in manufacturing sector payrolls. The new orders, unfilled orders and average workweek components each improved to new highs.
The prices paid index also improved to a less-negative 3.5. During the last ten years there has been a 74% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 83% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months also slipped during July after having improved to its highest level since 2003. Most of the index components fell except that expectations for prices paid, employment and inventories rose to new cycle highs.
The figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS database.
Residential Housing and Personal Bankruptcy from the Federal Reserve Bank of Philadelphia can be found here.
| Philadelphia Fed (%) | July | June | July '08 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| General Activity Index | -7.5 | -2.2 | -16.7 | -21.3 | 5.0 | 8.0 |
| Prices Paid Index | -3.5 | -13.0 | 71.3 | 36.4 | 26.3 | 36.7 |
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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