Monday, May 21, 2012

New York vs. Philly Fed Surveys

It’s the tale of two cities. Stock prices sold off sharply on Thursday last week partly because the Philadelphia Fed’s business survey was surprisingly weak in May. I’m not sure why this survey gets more attention than the other regional surveys, conducted by the Fed banks in Dallas, Kansas City, New York City, and Richmond. It’s probably because the Philly survey is among the first to come out. However, New York’s survey for May was released on Tuesday, and it was surprisingly strong.

Here’s the kicker, according to the NY-FRB: “The Empire State Manufacturing Survey is based on the same methodology and asks the same questions as the Philadelphia Fed’s Business Outlook Survey. Manufacturing companies with 100 or more employees or annual sales of at least $5 million are asked to participate in the Empire State Survey. On the first day of each month, the New York Fed sends a questionnaire to about 250 firms across New York State. Firms are added to the pool monthly to replace those that drop out. The same individual completes the survey each time, in many instances the CEO or another high-level representative. The New York Fed receives approximately 100 responses each month--roughly 90 percent via the Internet, the remainder by mail. The Fed publishes the survey results on the fifteenth of the month, or on the first business day following if that date falls on a weekend or holiday. Responses that cannot be incorporated into the report are included with revised figures released in the following month.”

Both the Philly-Fed and NY-Fed survey results are extremely volatile. They are less so when they are averaged together. When I do so for general business conditions, new orders, and employment, the May averages are down from April, but remain solidly in positive territory.

Risk Aversion Again (1) Elections upend Euro Mess cleanup efforts. (2) Debt and fiscal cliffs. (3) Earnings-led bear market or another P/E-led correction? (4) Can Europe survive a fall? (5) The “endgame”scenario is back. (6) Bank runs. (7) Another lame G8 communique. (8) The euro zone’s day of infamy. (9) “Pay me so I can pay you, or else!” (10) Better to use Greece’s bailout euros to recapitalize distressed banks. (11) Same survey shows strength in NY-Fed’s district, weakness in Philly-Fed district. (12) “Dark Shadows” (+). (More for subscribers.)

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