Wednesday, February 6, 2013

Philly Fed: Colorado Coincident Index rises again in Colorado

The Coincident Index for Colorado rose 0.9 percent over three months from September to December this year, which was above the national index's increase of 0.6 percent. December's index, which was released last month 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 (0.9%) than in mant states, but showed Colorado lagging behind many western states such as Utah, Nevada and Idaho. 

According to the November 2012 report:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for December 2012.  In the past month, the indexes increased in 32 states, decreased in 10, and remained stable in eight for a one-month diffusion index of 44. Over the past three months, the indexes increased in 41 states, decreased in seven, and remained stable in two (New Mexico and Wisconsin) for a three-month diffusion index of 68. 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  December and 0.6 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 September 2012 and remained above the national rate through December. 




The second graph shows year-over-year changes in the index, and an upward trend was evident through most of 2011. The Colorado index now appears to be outpacing the national index. 


Colorado's relatively strong performance in this index is not surprising given that Colorado's unemployment rate has moved below the national rate over the past two months, and employment continues to grow, albeit at a slow pace. 

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.