Global| Jun 26 2018Philadelphia Fed Nonmanufacturing Business Activity Indexes Rise Further; Prices Strengthen
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions at the company level increased to 40.7 in June, the highest level in three years. Fifty-six percent of respondents reported an increase [...]
The Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Index of current conditions at the company level increased to 40.7 in June, the highest level in three years. Fifty-six percent of respondents reported an increase in current activity while 15% reported a decline.
The expectations index at the company level for June surged to 58.2 from 45.3. It remained down, however, versus 62.6 in January.
On the labor front, the wage & benefit cost index surged to a record high as 53% of respondents reported paying higher wages and two percent reported a decline. The number of full-time permanent employees index increased sharply to the highest level in three months after falling sharply in May. The index of part-time/temporary employment strengthened m/m to the highest point since September 2015. The average workweek reading eased following a sharp increase in May.
The index of prices paid increased sharply and roughly equaled the record high. An increased 39% of respondents paid higher prices while two percent paid less. The prices received index surged and approximated the record high.
The new orders index was fairly steady at the highest level since February 2015. The sales or revenue index declined, however, to a three-month low and the inventories also fell. The unfilled orders index declined to the lowest level since February of last year.
The index for capital spending on equipment and software remained near the highest level since March 2012. The capital expenditures for facilities index improved slightly following its May decline to the lowest point since November 2016.
The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.
| Federal Reserve Bank of Philadelphia: Nonmanufacturing Business Outlook Survey (Diffusion Index, SA) | Jun | May | Apr | Jun'17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| General Activity - Company | 40.7 | 39.5 | 26.0 | 27.5 | 27.3 | 19.7 | 31.3 |
| New Orders | 35.5 | 36.2 | 12.5 | 19.6 | 19.1 | 15.7 | 21.8 |
| Sales or Revenue | 24.6 | 33.7 | 13.5 | 35.0 | 27.9 | 16.2 | 23.8 |
| Inventories | 5.1 | 8.2 | 0.1 | 6.9 | 3.8 | 4.4 | 5.2 |
| Number of Full-Time Permanent Employees | 19.9 | 7.7 | 15.8 | 18.2 | 14.8 | 11.7 | 15.6 |
| Prices Paid | 36.6 | 33.8 | 26.0 | 10.4 | 21.4 | 17.5 | 19.3 |
| Wage & Benefit Costs | 51.1 | 46.4 | 28.3 | 26.4 | 33.4 | 31.2 | 32.5 |
| Expected General Activity - Company | 58.2 | 45.3 | 40.8 | 49.4 | 49.9 | 43.0 | 53.8 |
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.
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