Friday, February 18, 2011

Philadelphia Fed Survey

The Philly Fed Survey reported on Thursday blew away the estimate of 22 with a reading of 35.9.  Although the headline number was positive a worrying sign is the drop in new orders which does not bode well for future surveys.  I came across the following survey within the report though and wanted to highlight an interesting trend.

The first part of the survey (section a) asks who has raised prices on finished good. 56.5% report a price increase from 0-10%.  Looking at the second part (section b) the trend continues with 59.2% expecting to further raise prices over the next three months.

Bernanke tells us that price increases are due purely to supply and demand but his argument is not supported by the third part of this survey.  When asked "are you currently experiencing shortages or delayed delivery of any critical raw or intermediate products" 67.1% reported NO. Input costs continue to rise very quickly, yet supply is keeping up with demand.  This would imply costs are being driven more by speculation than a strengthening global economy.


No comments:

Post a Comment