Global| Sep 16 2010Philly Fed Business Outlook Survey...Improves But Remains Negative
by:Tom Moeller
|in:Economy in Brief
Summary
It's of little solace that the latest General Activity Index in the Philadelphia Fed's September Business Outlook Survey bounced up. The reading improved this month to -0.7 from -7.7 in August, but that remained only the second [...]
It's of little solace that the latest General Activity Index in the Philadelphia Fed's September Business Outlook Survey bounced up. The reading improved this month to -0.7 from -7.7 in August, but that remained only the second negative reading since July of last year. Moreover, it remained down sharply from the highs above +20.0 in this year's second quarter.
Virtually all of this month's improvement occurred in two components. The delivery times series rose seven points (longer times), but remained negative, while the employment index rose to a modest +1.8 from -2.7 in August. During the last ten years there has been an 83% correlation between the level of the employment index and the m/m change in payroll employment.
Elsewhere, the news from the Philadelphia Fed was bleak including deterioration in the new orders, shipments, unfilled orders and inventory series. Each fell further into negative territory.
The message from the two pricing series confirms the notion of little, if any, improvement. The prices paid index fell to its lowest level since August of 2009 and the prices received index was its most negative since July of last year. During the last ten years there has been a 70% correlation between the prices paid index and the m/m change in the PPI for core intermediate goods.
| Philadelphia Fed Business Outlook (%) | September | August | July | September 2009 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| General Activity Index | -0.7 | -7.7 | 5.1 | 10.5 | -7.6 | -21.4 | 5.0 |
| New Orders | -8.1 | -7.1 | -4.3 | 1.9 | -9.7 | -14.7 | 6.9 |
| Shipments | -7.1 | -4.5 | 4.0 | 2.9 | -8.0 | -9.2 | 9.9 |
| Delivery Times | -4.1 | -11.0 | -8.1 | -10.4 | -15.3 | -10.6 | -6.1 |
| Inventories | -16.7 | -11.6 | 4.5 | -19.0 | -24.0 | -16.7 | -3.7 |
| Number of Employees | 1.8 | -2.7 | 4.0 | -15.7 | -23.8 | -8.8 | 6.8 |
| Prices Paid | 9.8 | 11.8 | 13.1 | 12.1 | -3.9 | 36.3 | 26.3 |
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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