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 12/20/07 For Dec 2007 | ||||||||||||
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Highlights
Today's dip in the Philadelphia Federal Reserve's business activity index will definitely feed talk of recession, at least talk of a turn lower for the manufacturing sector. The Philly Fed's main index for December fell to -5.7, its lowest reading in five years and vs. +8.2 in November. But some of the report's key components are still pointing to growth, a reminder that this index, like the business activity index for the ISM's non-manufacturing report, is not a composite of components rather the answer to a single question on whether month-to-month conditions are up, down or the same. New orders are up, at +10.7 vs. November's +3.5. Shipments are also up, at a strong +18.4 vs. +4.7.
Perhaps the deepest negative in the report is contraction in inventories, to -6.7 vs. +2.5 in contrast to the rise in shipments and an indication that businesses, concerned about slow demand ahead, may not be replenishing inventories. Prices paid remained very high, at 35.0. But given open conditions in the supply chain, indicated by a -1.4 reading for deliveries, businesses will be having a hard time passing those costs on. Prices received in fact showed less pressure in the month at +16.7 vs. +18.6.
Financial markets showed no initial reaction to the results which point to a sub-50 headline reading for the ISM's manufacturing report to be released at the opening of the 2008 calendar. A contractionary reading in that report would be sure to move the markets.
The general business conditions component of the Philadelphia Fed's business outlook survey index inched 1.4 points higher in November to 8.2, remaining in a modestly positive range. New orders and shipments also were barely in positive territory, indicating a very sluggish manufacturing sector in the mid-Atlantic. Price readings were mixed with prices paid relatively steady and coming in at 37.7 while prices received showed increasing pressure, rising about 6 points to 18.6.
Philadelphia Fed survey Consensus Forecast for December 07: 6.2
Range: 0.5 to 8.0
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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 | ||||||||||||||||||||||||||
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