Federal Reserve Bank (Fed) of Philadelphia Prices Paid

Philadelphia Fed Prices Paid Index shows a change in the prices for goods and services paid by leading manufacturing companies in Philadelphia district. This region includes Pennsylvania, New Jersey and Delaware, i.e. states with high economic activity. So, this index often correlates with the national one.

The Prices Paid index is calculated based on a survey of leading manufacturing companies in the region. Business leaders are asked to assess whether the situation in their companies has improved, worsened or remained unchanged. In addition to prices paid for materials, goods and services in the production process, the survey also includes an assessment of new and unfilled orders, shipment, delivery times, inventories, prices received, number of employees, average hours worked per week. Also, respondents are asked to assess the overall level of business activity in their sector. Answers in two time intervals are expected: evaluation of the last month and a forecast for the next six months.

The index is calculated as a difference between the percentage of positive estimates and the percentage of negative ones. If the final index value is positive, it means that the prices paid by manufacturers have increased on the average across the region. Readings below zero indicate a decrease in the prices paid.

The region falling under the responsibility of the Philadelphia Federal Reserve Bank is one of the most economically active regions of the country, that is why its indices are often monitored by analysts and considered to be indirect leading indicators of the US economy state. An increase in prices paid can be a leading indicator of inflation in the region, since it causes a near-term rise in prices for final products.

Dynamics of the Philadelphia Fed Prices Paid index can cause insignificant volatility of dollar quotes.