Tuesday, July 24, 2012

Coincident index weakens in Colorado, national index grows

The Coincident Index for Colorado rose 0.09 percent from May 2012 to June 2012, which below the national index's increase of 0.18. . June's index, which was released today by the Philadelphia Federal Reserve Bank, is an index calculated from nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).

The three-month change in the index, shown in the map here, was smaller in Colorado than in most states. Most states saw an increase in the index while Colorado and seven other states showed declines.

According to the June 2012 report:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for June 2012. In the past month, the indexes increased in 30 states, decreased in nine states, and remained stable in 11 states, for a one-month diffusion index of 42. Over the past three months, the indexes increased in 39 states, decreased in nine states, and remained stable in two states, for a three-month diffusion index of 60. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index rose 0.2 percent in June and 0.6 percent over the past three months.

The graph below compares the month-to-month change in both the Colorado Index and the US index. In recent months, the growth rate in Colorado has begun to lag the nation overall.


The second graph shows year-over-year changes in the index, and an upward trend was evident through most of 2011, but now shows signs of falling below national growth rates.


Overall, this report suggests some slowing in Colorado economic activity in relation to the nation as a whole. Nevertheless, the overall trend is one of mild growth.

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.