The general conditions index from this business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey, widely followed as an indicator of manufacturing sector trends, is correlated with the ISM manufacturing index and the index of industrial production. Why Investors Care
| Released on 9/20/07 For Sep 2007 | ||||||||||||
| ||||||||||||
Highlights
The Philadelphia Fed's business activity index rose to 10.9 in September vs. a dead-flat 0.0 reading in August. The headline reading along with most components indicate that conditions in the Mid-Atlantic manufacturing region are expanding. New orders showed strong growth, at 15.1 vs. 7.1, as did shipments at 16.9 vs. 12.4.
One clear negative in the report was a steep slowdown in employment plans, as the employment index fell to a still positive 7.5 from 21.2. The decrease appears to be related to troubles in the construction and financial sectors as 9.1 percent of respondents said the turmoil has resulted in a substantial decline in employment plans with 7.8 percent reporting a moderate decline and 10.4 percent a slight decline. These results are the first of their kind and show the special flexibility of the Philadelphia report at its best. Other anecdotal reports, nearly all of which do not offer special questions, have been reporting only isolated, vague comments on these issues. Roughly the same portion of respondents said the trouble has had a negative effect on their capital spending plans.
Price readings were mixed with prices paid rising to 23.1 from 15.4 but prices received dipping to 3.3 from 6.8. The text of the report downplayed price pressures. Other readings included a rise in inventories to 4.0 from -4.8, a gain in line with gains in new orders. The six-month overall outlook held steady and strong at 35.7 vs. 36.2.
Financial markets often become rigid in their reaction to economic data and are not likely to pick up on the results of this report's special questions. But they are significant and offer the first evidence that the credit crunch is negatively affecting manufacturers' plans. Otherwise the data are positive and point to an upturn for this month's anecdotal business surveys headed by the ISM reports in the first week of October. Treasury prices dipped slightly and the dollar firmed slightly in initial reaction to the report.
The general business conditions component of the Philadelphia Fed's business outlook survey index came in dead even flat at 0.0 in August, indicating no change from July. The index is not a composite of components, a look at which shows mostly strength. New orders showed growth at 7.1, though down from 11.3 in July, while shipments posted a similar month-to-month comparison at 12.4 vs. 20.3. The six-month outlook actually rose to 36.2 from 30.4, an indication manufacturers in the region are confident that orders will continue.
Philadelphia Fed survey Consensus Forecast for September 07: 4.0
Range: 0.0 to 12.0
![[Chart]](chart.gif)
|
The Philadelphia Fed's business outlook survey is a good leading indicator for the index of industrial production. It is reported in the third week of the month and thus has a lead time of nearly three weeks. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}