Courtesy of Doug Short.
Note from Doug: Having lived for two years in a Paoli, PA, a suburb west of Philadelphia just south of Valley Forge, I have a special interest in this regional indicator. But, more importantly, it gives a generally reliable clue as to direction of the broader Chicago Fed’s National Activity Index.
The Philly Fed’s Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. Here’s an excerpt from the Business Outlook Survey released today:
Responses to the Business Outlook Survey this month suggest that regional manufacturing is showing signs of recovering, following several months of decline. The survey?s broad indicators for activity, shipments, and new orders recorded positive readings after two months in negative territory. Responding firms indicated that employment was slightly higher this month. The broadest indicator of future activity remained positive and showed marginal improvement over its reading last month. (Full PDF Report)
The first chart below is based on the complete historical series for general activity dating from May 1968 with recessions highlighted.
In the next chart, the red dots show the indicator itself, which is quite noisy, and the 3-month moving average which is more useful as a indicator of coincident economic activity. The average absolute monthly change across this data series is 8.06, which suggests that the 26.2 point change from last month is statistically significance.
The next chart is an overlay starting in 2000 of the General Activity Index and the Future General Activity Index — the outlook six months ahead. The improvement in the latest future outlook is definitely encouraging.
This month’s general activity is continuation of the rebound from the massive 3-month downturn (March-June) in the General Activity Index prior to July’s encouraging uptick and August’s continuation of the downturn. Here is a chart highlighting the three worst 3-month declines in its history, which helps to put the extreme volatility of 2011 in better perspective.
The Philly Fed General Activity Index continues to be a key indicator to watch closely.
