For release: Immediate
Contact: Marilyn Wimp (215) 574-4197
The Federal Reserve Bank of Philadelphia has revised its economic activity (coincident) and leading indexes for the states in the Third District-Pennsylvania, New Jersey, and Delaware. The Bank has broadened the scope of the indicators used in compiling the indexes and, for the first time, has developed a leading index for Delaware. The indexes highlighting October data will be released after 2 p.m. on Monday, Dec. 4 and will be made available on this website at www.philadelphiafed.org.
The new economic activity indexes now include five indicators: nonfarm employment, the unemployment rate, average hours worked in manufacturing, industrial electricity sales, and real personal income minus transfer payments. Previously, these coincident indexes used only the first three variables.
The new leading indexes use the economic activity index for each state, as well as various state, regional, and national variables: initial unemployment claims, housing permits, vendor delivery time from the Bank's Business Outlook Survey, and the yield on 10-year Treasury bonds minus the fed funds rate. Like the original indexes, the new ones are constructed using a variation of a model designed by economists James Stock and Mark Watson.
These revisions to the indexes have meant improvements: the scope of the data used in the economic activity indexes is much broader; long-term trends in the state indexes are now comparable; and cyclical fluctuations are easier to recognize in each state's current economic activity index. The new leading indexes are more reliable than the previous ones.
For a complete description of the new indexes, see Theodore M. Crone, "A New Look at Economic Indexes for the States in the Third District," Business Review, Federal Reserve Bank of Philadelphia, November/December 2000.