Global| Jun 19 2008Philadelphia Fed Index Slipped, Prices Surged
by:Tom Moeller
|in:Economy in Brief
Summary
The Index of General Business conditions in the manufacturing sector for June, from the Philadelphia Federal Reserve Bank, slipped to -17.1 following improvement during May. A level of -10 had been expected. The Philadelphia Fed [...]
The Index of General Business conditions in the manufacturing sector for June, from the Philadelphia Federal Reserve Bank, slipped to -17.1 following improvement during May. A level of -10 had been expected.
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.
During the last ten years there has been a 61% 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 43% correlation with q/q growth in real GDP.
The new orders sub-index deteriorated sharply and lost half of the improvement during May. Shipments also fell sharply as did the employment index.
The prices paid index surged to the highest level since 1980. During the last ten years there has been a 67% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 82% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months fell in June to 21.2 from 28.2 in May. The level of index was still below the full-year, 2007 reading of 24.7. Expectations for the production, shipments and employment indexes all fell. Prices rose sharply.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found here.
Liquidity Crises from the Federal Reserve Bank of Philadelphia is available here.
The Evolution of the World Income Distribution*, also from the Federal Reserve Bank of Philadelphia, can be found here.
| Philadelphia Fed (%) | June | May | June '07 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| General Activity Index | -17.1 | -15.6 | 17.7 | 5.1 | 8.1 | 11.5 |
| Prices Paid Index | 69.3 | 53.8 | 27.4 | 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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