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Economy in Brief

U.S. Empire State Index Slightly Positive
by Tom Moeller August 15, 2008

The Federal Reserve Bank of New York reported that its July index of manufacturing activity in the Empire State improved to a slightly positive 2.77 after having been at -4.92 during June. It was the first positive reading since April though the level of the index remained quite low. A reading of -4.2 for July had been the Consensus expectation.

The figure is a diffusion index. 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.

The subseries for new orders, shipments and the number of employees all remained negative last month while the series for inventories and the average employee workweek turned positive.

The employment index was near the most negative reading since 2003. In the (perhaps too) short seven year history of the NY employment index, there has been an 86% 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 eased to its lowest level since April after hitting a series' high in June. Since 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 improved to its highest level this year after having fallen sharply in June. The subseries for new orders and shipments were up sharply while the employment series showed just a modest gain.

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.

The Changing Nature of the U.S. Balance of Payments from the Federal Reserve Bank of New York is available here.

Empire State Manufacturing Survey July June July '07  2007 2006 2005
General Business Conditions (diffusion index, %)   2.77 -4.92 25.18 17.23 20.24 15.53
Prices Paid 65.17 77.89 34.41 35.64 41.88 44.74
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