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Economy in Brief

Empire State Index Unexpectedly Firm
by Tom Moeller November 15, 2006

The November index of manufacturing activity in New York State firmed again. The Index of General Business Conditions rose 3.74 points to 26.66 on top of the nearly twelve point advance during the prior two months. Consensus expectations for the Empire State index had been for a decline to 15.0. The figures are reported by the Federal Reserve Bank of New York.

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.

The indexes for new orders, employment and shipments led the m/m improvement. Each of the other component series rose as well with the exception of work hours which fell for the second month.

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.

Pricing pressure also improved moderately. The 4.07 rise in the prices paid index came after a ten point decline during October. 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.

The Empire State index of expected business conditions in six months made up for all of the weakness in recent months with a 7.59 point rise.

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.

What Are the Risks to the United States of a Current Account Reversal? from the Federal Reserve Bank of San Francisco can be found here

Empire State Manufacturing Survey November October Nov. '05 2005 2004 2003
General Business Conditions (diffusion index) 26.66 22.92 21.88 15.56 28.79 15.98
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