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Economy in Brief

Empire State Index Recovered in June
by Tom Moeller June 19, 2006

The June Empire State Mfg. Index of General Business Conditions, reported by the Federal Reserve Bank of New York, surged 16.07 points to 29.01 and recovered all of the declines during the prior two months. Consensus expectations had been for a slight m/m decline to 11.0.

Since the series' inception in 2001 there has been a 75% correlation between the index level and the three month change in U.S. factory sector industrial production.

New orders & shipments both surged to near the series' recent highs while the index indicating the number of employees slipped to its lowest level of the year.

Pricing pressure rose to a level near the year's high. Since 2001 there has been an 88% correlation between the index of prices paid and the three month change in the core intermediate materials PPI.

Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.

The Empire State index of expectations for business conditions in six months for June recovered just a piece of the prior month's sharp decline as expected new orders fell and pricing pressure surged to the highest level of this year.

The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.

For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click here.

The rise in the Empire State Manufacturing index ran somewhat counter to the decline in Philadelphia Fed's index reported Friday. The Federal Reserve Bank of Richmond will report its June Mfg. Survey index later this week. The reading will follow a sharp fall-off in the May figure, notably for orders, shipments and jobs The data will be available in the Haver SURVEYS database.

During the last ten years there has been a 39% correlation between the Richmond survey index level and the one month change in U.S. factory sector industrial production. The latest Richmond Fed Mfg. Survey is available here.

The Richmond Fed also publishes indexes of conditions in the Service Sector and the latest release is available here.

Empire State Manufacturing Survey June May June '05 2005 2004 2003
General Business Conditions (diffusion index) 29.01 12.94 10.18 15.56 28.79 15.98
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