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Economy in Brief

Empire State Index Slipped During July
by Tom Moeller July 17, 2006

The Empire State Mfg. Index of General Business Conditions, reported by the Federal Reserve Bank of New York, during July reversed most of the prior month's surge and fell 13.37 points to 15.64. Consensus expectations had been for a lesser decline to 20.0.

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 reversed all of the prior month's improvement with sharp declines to the lowest levels of 2006. However, the index indicating the number of employees rose modestly m/m to a still low level.

Pricing pressure eased slightly. 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 July rose sharply to the highest level since January as expected new orders surged.

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 Predictive Abilities of the New York Fed’s Empire State Manufacturing Survey from the Federal Reserve Bank of New York is available here.

Empire State Manufacturing Survey July June July '05 2005 2004 2003
General Business Conditions (diffusion index) 15.64 29.01 23.61 15.56 28.79 15.98
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