Global| Sep 16 2005Philadelphia Fed Indexes: Activity Down Hard, Pricing Surged
by:Tom Moeller
|in:Economy in Brief
Summary
The Philadelphia Fed's Index of General Business Conditions in the manufacturing sector fell sharply in September to 2.2 from 17.5, reflecting damage caused by Hurricane Katrina. Consensus expectations had been for a lesser decline to [...]
The Philadelphia Fed's Index of General Business Conditions in the manufacturing sector fell sharply in September to 2.2 from 17.5, reflecting damage caused by Hurricane Katrina. Consensus expectations had been for a lesser decline to 13.3.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
The sub index measuring new orders was -0.5, negative for the first month in over two years. The shipments index also fell and reversed most of the August rise. The level of 13.2 was down a ton from this year's high of 29.4. The index covering the number of employees halved the August level and fell to 2.7. During the last ten years there has been a 64% 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 separate index of expected business conditions in six months fell sharply to 7.0 after the August jump to its best level of 2005.
The prices paid index surged and doubled the August level. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it's been 43%.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found here.
| Philadelphia Fed Business Outlook | Sept | Aug | Sept | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| General Activity Index | 2.2 | 17.5 | 15.9 | 28.1 | 10.6 | 7.7 |
| Prices Paid Index | 52.7 | 25.9 | 56.7 | 51.3 | 16.8 | 12.3 |
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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