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Economy in Brief

Empire State Manufacturing Index Eases; Prices Improve
by Tom Moeller  September 17, 2018

The Empire State Manufacturing Index of General Business Conditions declined to 19.0 during September from 25.6 in August. It was the lowest reading since April, but suggested continued economic growth. The Action Economics Forecast Survey expected a reading of 22.1. These data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York, northern New Jersey and southern Connecticut.

Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The calculated figure slipped to 56.0 from 56.6, and remained below the June high of 58.2. During the last ten years, the index has had a 68% correlation with the q/q change in real GDP.

Most of the components of the Empire State Survey declined this month, including new orders, shipments and unfilled orders. The delivery times reading also fell and indicated nearly the quickest  product delivery speeds since January. The inventories index surged to the highest level since May.

The number of employees index was fairly steady though it remained up sharply from its January low. During the last ten years, there has been a 77% correlation between the employment index and the m/m change in factory sector payrolls. An improved 22% of respondents reported increased employment and a higher 8% reported a decease. The index of future employment declined. The employee workweek reading increased, but remained well below its April high.

The prices paid index increased modestly, yet remained below the April high. Forty-nine percent of respondents indicated increased prices, while two percent reported a decline. Prices received fell to the lowest level since December.

The series measuring expectations for business conditions in six months declined to the lowest level since April. Expected prices paid increased, however, to the highest point since April 2012.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Sep Aug Jul Sep'17 2017 2016 2015
General Business Conditions (Diffusion Index, %, SA) 19.0 25.6 22.6 23.8 16.1 -2.6 -2.3
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 56.0 56.6 55.2 57.7 54.6 48.2 48.8
  New Orders 16.5 17.1 18.2 24.4 14.6 -0.8 -5.6
  Shipments 14.3 25.7 14.6 17.4 15.9 1.9 4.0
  Unfilled Orders 4.9 11.1 0.0 8.9 1.9 -8.8 -10.5
  Delivery Time 6.5 10.4 6.0 14.6 6.1 -4.8 -5.3
  Inventories 8.9 0.0 -4.3 6.5 1.5 -9.6 -7.1
  Number of Employees 13.3 13.1 17.2 14.4 8.3 -5.1 2.3
  Average Employee Workweek 11.5 8.9 5.6 8.3 4.9 -5.2 -4.8
  Prices Paid 46.3 45.2 42.7 35.8 29.0 15.7 8.8
  Prices Received 16.3 20.0 22.2 13.8 11.0 0.7 1.2
Expectations 6 Months Ahead 30.3 34.8 31.1 40.8 42.6 29.0 30.3
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