Econoday Report: Philadelphia Fed Survey 20, 2005

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2005 U.S. Economic Events & Analysis

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Philadelphia Fed Survey

Definition
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 10/20/05 For Oct 2005

General Business Conditions Index, Level
Actual	17.3
Consensus	10.0
Consensus Range	5.0 to 20.0

Highlights
The Philadelphia Fed's manufacturing index in October fully reversed September's plunge, rising to 17.3 from 2.2. New orders, as they did in the Empire State report earlier this week, rose sharply, to 18.6 from -0.5, to indicate rising activity in the months ahead.

Price readings, as have they have in other reports, showed severe pressures. The prices paid index jumped to 67.6 from 52.7 while the prices received index jumped to 32.6 from 8.6. The reading in the latter is consistent with anecdotal reports suggesting that manufacturers are beginning to pass along price increases and more.

A special question in the month, asking respondents whether respondents "experienced any change in demand or problems" due to the hurricanes, was a bit fuzzy but showed 50% saying they have. About as many said they saw a resulting increase in demand, 19.8%, as did a decrease, at 16.2%.

Bonds dipped and the dollar firmed in reaction to the report, which points to a quick recovery for manufacturing but price inflation along with it. Note that this report and last week's industrial production report from the Federal Reserve Board both showed a sharp dip in September, a contrast to the ISM manufacturing report that showed a sharp gain. Durable goods data next week will offer perhaps definitive information on the effects of the storms.

Market Consensus Before Announcement
The general business conditions component of the Philadelphia Fed's business outlook survey dropped to 2.2 in September from a level of 17.5 in August. This was in sharp contrast to other manufacturing surveys last month.

Philadelphia Fed survey Consensus Forecast for Oct 05: 10
Range: 5 to 20

Trends

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.

Data Source: Haver Analytics

2005 Release Schedule

Released On: 1/20 2/17 3/17 4/21 5/19 6/16 7/21 8/18 9/15 10/20 11/17 12/15

Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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