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Economy in Brief

U.S. Empire State Index Slipped
by Tom Moeller May, 2008

The May index of manufacturing activity in New York State slipped to -3.23% and gave back a small piece of the prior month's improvement. It was just slightly more of a decline than expectations for a May reading of zero. The figure is a diffusion index and it is reported by the Federal Reserve Bank of New York.

Since the series' inception in 2001 there has been a 55% correlation between the index level and the three month change in U.S. factory sector industrial production.

Weaker shipments accounted for most of the overall decline while new orders fell just slightly and employment rose. In the (perhaps too) short seven year history of the NY employment index, there has been an 85% correlation between it and the three month growth in overall factory sector employment.

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 advanced sharply yet again. The latest index level of 69.57 set a new record. Since the series' inception in 2001 there has been an 81% 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 ticked up just slightly and remained near the lowest level since 2001.

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.

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

Empire State Manufacturing Survey May April May '07  2007 2006 2005
General Business Conditions (diffusion index, %)   -3.23 0.63 10.10 17.23 20.24 15.53
Prices Paid 69.57 57.29 34.44 35.64 41.88 44.74
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