Tuesday, September 25, 2012

Philly Fed: Colorado again lags national index in year-over-year comparisons

The Coincident Index for Colorado rose 0.38 percent from July 2012 to August 2012, which was above the national index's increase of 0.14. August'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 larger in Colorado (0.4%) than in most states. Nationally, the index increased 0.3 percent. 

According to the August 2012 report:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for August 2012. In the past month, the indexes increased in 25 states, decreased in 12 states, and remained stable in 13 states, for a one-month diffusion index of 26. Over the past three months, the indexes increased in 28 states, decreased in 16 states, and remained stable in six states, for a three-month diffusion index of 24. 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 0.1 percent in August and 0.5 percent over the past three months.

The graph below compares the 3-month change in both the Colorado Index and the US index. After five months of lagging the nation in the 3-month change, Colorado moved above the national growth rate in August 2012.


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.Colorado has shown a smaller year-over-year growth rate than the nation for the past five months.

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.