Summary of Regional Conditions and Expectations (SORCE)

• Description: The Cleveland Fed Summary of Regional Conditions and Expectations (SORCE) is a set of indexes that serve as timely indicators of economic activity in the Fourth District of the Federal Reserve System, which covers all of Ohio and parts of Pennsylvania, Kentucky, and West Virginia.
• How to interpret the SORCE indexes: The indexes are based on responses to a survey of business and community leaders in our region. Each index is the difference between the percentage of the survey respondents reporting increases and the percentage reporting decreases in areas such as demand, employment, and inflation. Measures calculated this way are often called diffusion indexes (DIs).
• Benefits: The SORCE indexes have tracked standard measures of economic activity effectively over the history of the series. Additionally, these indexes provide information that can be more timely than most regional economic statistics.

Background

Description

The sample composition, precision, seasonal adjustment, and benchmarking of the SORCE indexes are described in detail in our District Data Brief Introduction to Cleveland Fed Summary of Regional Conditions and Expectations (SORCE). We recommend reviewing this brief before using the data, as it provides a comprehensive explanation of the variables contained in the downloadable dataset.

Since its founding, one of the Cleveland Fed’s main objectives has been to gather information from the community on economic activity. One way we obtain this information is through a survey that we conduct eight times per year. This survey asks regional business and community leaders about a wide range of topics, from their staffing levels and input costs to customer demand. The information from this survey is one input that informs the Cleveland Fed’s contributions to the Beige Book and preparation for Federal Open Market Committee (FOMC) meetings.

In June 2014, we began quantifying information from conditions surveys, and we added questions about wages and expectations in 2016. We use all this information together to produce the Summary of Regional Conditions and Expectations (SORCE) indexes. These indexes provide timely measures of economic activity in the Fourth Federal Reserve District, which encompasses all of Ohio and parts of Pennsylvania, Kentucky, and West Virginia. The Cleveland Fed began releasing the SORCE indexes regularly starting in February 2025.

Methodology

The SORCE indexes are compiled by taking the responses to the core questions in the survey and calculating the difference between the percentage of the survey respondents reporting increases and the percentage reporting decreases for a given category. For example, the business conditions question asks, “How has customer demand for your firm’s products or services changed in the last two months?” The corresponding SORCE index could range from −100 percentage points (if everyone reports decreases in demand) to +100 percentage points (if everyone reports increases). An index of zero would indicate no change in demand: The percentage of respondents reporting increases is offset by the percentage reporting decreases. This type of calculation is generally referred to as a diffusion index (DI). The SORCE indexes are seasonally adjusted. Non-seasonally adjusted (NSA) versions of the indexes are available in the downloadable dataset.

The topic indexes are based on responses to the following survey questions:

Business conditions - How has customer demand for your firm's products or services changed in the last two months? (Increased / No change / Decreased)

Expected business conditions - How do you expect customer demand to change over the remainder of the current quarter and into the next quarter? (Increase / No change / Decrease)

Output prices - How have the prices of your products or services changed in the last two months? (Increased / No change / Decreased)

Employment - How have your staffing levels changed in the last two months? (Increased / No change / Decreased)

Expected employment - How do you expect your staffing levels to change over the remainder of the current quarter and into the next quarter? (Increase / No change / Decrease)

Wages - How have the wages and salaries you pay changed in the last two months? (Increased / No change / Decreased)

Nonlabor costs - How have input costs (excluding employee compensation) changed in the last two months? (Increased / No change / Decreased)

Expected nonlabor costs - How do you expect input costs (excluding employee compensation) to change over the remainder of the current quarter and into the next quarter? (Increase / No change / Decrease)

Planned capital expenditures - Have you made any changes to this fiscal year's capital investment plan in the last two months? (Increased anticipated investments / No change / Decreased anticipated investments)