Yahoo Finance posted another one of its invaluable comments on the markets today: "It appears the weaker-than-expected Philly Fed Index has taken the steam out of the market..." But that did get me to wondering: what in the heck is the "Philly Fed Index" and where can I find it and what does it mean??
Philly Fed Index
- Thread starter ShoeshineBoy
- Start date
http://www.phil.frb.org/
The index declined which is why it caused a ruckus in the futures.
From Bloomberg- Philadelphia Factory Index Unexpectedly Contracts for First Time This Year
The index declined which is why it caused a ruckus in the futures.
From Bloomberg- Philadelphia Factory Index Unexpectedly Contracts for First Time This Year
Highlights
August Philadelphia Fed manufacturing index -3.1.
Key Factors
Sharp 10 point drop leaves lowest level and first negative read since Dec.
Orders fell 9.3 after the 13.5 point plunge in July. Orders provide the outlook.
More consistent with flat trend in actual factory orders and worsened near term outlook.
Shipments follow new orders. Fell to -3.3, down 18 points over two months.
The employment component took another step lower to -13.4, was in the black at 5.1 in May.
Price indices show far stronger input costs (steel, energy) that product price gains. No help to profits.
Volatile index given the very small region that it covers (Southern NJ, Central/Eastern PA, Northern DE).
Big Picture
The jump to positive growth in Jan set the stage for the ISM index after the deep sectoral recession witnessed for over a year. The drop back below 0 in August bodes poorly for the manufacturing outlook as weak demand (new orders) steals post recession enthusiasm. The upturn which arrived with the new year largely reflected low inventories as new orders (and the expectation for more) rolled right to production. The outlook is fading given the continued absence of business investment. The Philly index is especially volatile given the small region covered. The manufacturing sector moves in mini-cycles compared to the overall economy and the regional measures move in even shorter cycles with far more month to month volatility.
Category Aug Jul Jun May Apr
Total Index -3.1 6.6 22.2 9.1 12.3
ISM-basis 47.9 49.2 54.4 52.5 52.7
6-month Outlook 41.6 50.4 60.9 51.3 48.3
August Philadelphia Fed manufacturing index -3.1.
Key Factors
Sharp 10 point drop leaves lowest level and first negative read since Dec.
Orders fell 9.3 after the 13.5 point plunge in July. Orders provide the outlook.
More consistent with flat trend in actual factory orders and worsened near term outlook.
Shipments follow new orders. Fell to -3.3, down 18 points over two months.
The employment component took another step lower to -13.4, was in the black at 5.1 in May.
Price indices show far stronger input costs (steel, energy) that product price gains. No help to profits.
Volatile index given the very small region that it covers (Southern NJ, Central/Eastern PA, Northern DE).
Big Picture
The jump to positive growth in Jan set the stage for the ISM index after the deep sectoral recession witnessed for over a year. The drop back below 0 in August bodes poorly for the manufacturing outlook as weak demand (new orders) steals post recession enthusiasm. The upturn which arrived with the new year largely reflected low inventories as new orders (and the expectation for more) rolled right to production. The outlook is fading given the continued absence of business investment. The Philly index is especially volatile given the small region covered. The manufacturing sector moves in mini-cycles compared to the overall economy and the regional measures move in even shorter cycles with far more month to month volatility.
Category Aug Jul Jun May Apr
Total Index -3.1 6.6 22.2 9.1 12.3
ISM-basis 47.9 49.2 54.4 52.5 52.7
6-month Outlook 41.6 50.4 60.9 51.3 48.3
Thanks for all the analysis! I wish you were writing for Yahoo...
I have seen this number be way off and not move the market. In my humble opinion, I think this moved the market more because of a move in the futures pits than the number. Let me explain:
Right before the number was released, the s&ps were in a range, I belive 932-933, I don't remember the exact numbers right now but it was a tight range of a point or so. About 45-30 seconds before the number came out, Merrill started buying the hell out of futures contracts, pushed them up at least 2.5 points getting many people long thinking merrill new what the hell he was doing. The number came out way lower than expected and I think the locals punished him and others trying to get out of their long futures sending them down 9 handles from the peak. Stocks followed the same pattern with buying right before the number on the futures spike, lots of bids, and then everyone sold the hell out of everything and punished the longs. Just my opinion, but in the past, this number has been way off and stocks didn't follow it. I think Merrills screwup helped the sell off mostly. Just my two cents. anyways, it was a good down scalp. Moral, always wait for the number before jumping in.
Right before the number was released, the s&ps were in a range, I belive 932-933, I don't remember the exact numbers right now but it was a tight range of a point or so. About 45-30 seconds before the number came out, Merrill started buying the hell out of futures contracts, pushed them up at least 2.5 points getting many people long thinking merrill new what the hell he was doing. The number came out way lower than expected and I think the locals punished him and others trying to get out of their long futures sending them down 9 handles from the peak. Stocks followed the same pattern with buying right before the number on the futures spike, lots of bids, and then everyone sold the hell out of everything and punished the longs. Just my opinion, but in the past, this number has been way off and stocks didn't follow it. I think Merrills screwup helped the sell off mostly. Just my two cents. anyways, it was a good down scalp. Moral, always wait for the number before jumping in.