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 9/18/08 For Sep 2008 | ||||||||||||
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Highlights
Manufacturers in the Mid-Atlantic states report improved activity in September with the headline index jumping to 3.8 vs. -12.7 -- rare good news for the economic outlook. New orders rose to 5.6 vs. -11.9 in August with shipments at 2.6 vs. August's -3.3. The six-month outlook for both readings posted significant gains: 44.2 vs. 39.4 for new orders and 43.1 vs. 36.3 for shipments. Unfilled orders showed another month of worrisome contraction, -10.2 vs. -8.7, but manufacturers remain cautiously positive on the six-month outlook which rose slightly to 7.6.
Manufacturers are positive on the outlook for employment, at 15.5 vs. 13.5, with the current reading, at -0.9, showing very little change from August. Inventories really fell back in September, at -22.9 vs. -6.6 in welcome news that manufacturers are responding to initial signs in last month's economic data that inventories were building too quickly.
A big positive in the report is substantial easing in inflation pressures. Prices paid fell nearly 25 points to 31.5 vs. 57.5 with prices received down more than 10 points to 15.5. The six-month outlook for prices paid fell more than 10 points to 41.7 though respondents, still hoping to keep asking prices firm, see little change for prices received, at 28.9 vs. 28.1. The dollar firmed in immediate reaction to the results which however hit during a sweep of talk that China Investment Corp. is increasing its stake in Morgan Stanley. Today's report offers hope that the ISM's manufacturing survey will show steady, not deteriorating, results for the month.
The general business conditions component of the Philadelphia Fed's business outlook survey index improved in August - or more precisely - was less negative, rising to minus 12.7 from minus 16.3 in July. The general business conditions index has been negative for every month going back to December 2007. Looking ahead, the new orders index does not bode well. New orders remained on the decline, coming in at minus 11.9 - little changed from July's minus 12.1.
Philadelphia Fed survey Consensus Forecast for September 08: -10.3
Range: -12.0 to -9.2
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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. |
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