Philadelphia Fed Index

There are many regional manufacturing surveys or indices, and they tend to be ranked in order of timeliness and the importance of the region. The two most important are the Chicago PMI and the Philadelphia Fed Index, in that order. While the Chicago PMI has an impressive 91% positive correlation with the national ISM Index, the Philadelphia Fed Index has a decent 78% positive correlation with the national ISM Index. The Philadelphia Fed's survey is first each month, actually coming out during the third week of the month for which it is reporting. Several smaller surveys are then released before the Chicago purchasing managers' report on the last day of each month. The purchasing managers' reports are measured like the national ISM Index - 50% marks the breakeven line between an expanding and contracting manufacturing sector. However, for the Philadelphia Fed index, 0 is the breakeven mark. These surveys can be of some help in forecasting the national ISM Index - particularly the Philadelphia and Chicago surveys which are more closely watched due to their timeliness and the fact that these regions represent a reasonable cross section of national manufacturing activities.

POTENTIAL IMPACT ON INTEREST RATES: HIGH