Global| Jul 18 2008Philadelphia Fed Index Stable & Low, Prices Surged
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Federal Reserve Bank indicated that its July Index of General Business conditions in the manufacturing sector held roughly stable at -16.3. The prior month's index reading was a low -17.1 and a level of -15 had been [...]
The Philadelphia Federal Reserve Bank indicated that its July Index of General Business conditions in the manufacturing sector held roughly stable at -16.3. The prior month's index reading was a low -17.1 and a level of -15 had been expected for this month.
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 held at its June level. The reading of -12.1 was still, however, up off the absolute low of -18.8 in April. The shipments index showed the same pattern at -8.0.
The employment index, at -7.3, recently showed the same pattern as orders and shipments.Though a somewhat improved 16.9% of respondents expected to increase employment levels, 24.2% expected to decrease them.
The prices paid index again surged, to the highest level since early-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 for the second month, to 18.0. The recent levels of index were well below the full-year, 2007 reading of 24.7. Expectations for unfilled orders and delivery times fell sharply while new orders were unchanged and employment rose. The prices slipped after the June surge.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found here.
The Changing Nature of the U.S. Balance of Payments from the Federal Reserve Bank of New York can be found here.
| Philadelphia Fed (%) | July | June | July '07 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| General Activity Index | -16.3 | -17.1 | 16.9 | 5.1 | 8.1 | 11.5 |
| Prices Paid Index | 75.6 | 69.3 | 25.8 | 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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