Philly Fed index beats forecasts
Plus-14.7 is index's first positive reading in a year
By Rachel Koning, CBS.MarketWatch.com
Last Update: 12:33 PM ET Jan. 17, 2002
WASHINGTON (CBS.MW) -- A measure of business activity in the Mid-Atlantic region registered a much-higher-than-expected 14.7 in January, the first positive reading in a year.
The Philadelphia Federal Reserve's monthly index was expected to show a negative 2.4 reading.
The reading was a negative 12.6 in December.
The index hadn't been this high since August 2000.
Surveys on new orders, which rose to 12.6 from negative 6.2, and shipments, which rose to 14.4 from negative 12.1, also showed sharp improvements.
Every other indicator except delivery times and inventories improved during the month.
The index is the first to be released among the various regional economic surveys.
The Philly index hit an eight-month low of negative 27.4 in October, in the aftermath of the Sept. 11 terrorist attacks.
A separate manufacturing report also showed signs of improvement.
Stabilization in the quarterly Manufacturers Alliance/MAPI Survey on the Business Outlook may offer some signs of a turnaround in 2002 for the beleaguered manufacturing sector, the group said Thursday.
Its December index hit 40 percent. In June 2001, the index reached a 29-year low of 35 percent. A reading below 50 percent shows a retraction in activity, while a reading above that line shows expansion.
"Recent data on the economy has been almost uniformly positive, and the Philadelphia Fed index is no exception," said Drew Matus, an economist with Lehman Bros. "With claims data pointing towards a near-flat payroll reading, a robust housing sector and suggestions that the inventory rebound is upon us, it seems that the economy is well-positioned for recovery."
"Despite this, we still expect the Fed to cut rates in order to make sure the recovery is not just an short-term inventory event. We do admit, however, that it is becoming an increasingly close call," he said.
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