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Economy in Brief

U.S. Empire State Index Negative; Prices Paid The Weakest Since January
by Tom Moeller September 15, 2008

The Federal Reserve Bank of New York reported that its September index of manufacturing activity in the Empire State was again negative. At -7.41 the reading fell from a positive 2.77 in August. Following modest improvement from more negative readings early this year, the figure has moved sideways. A reading of +1.0 for had been the Consensus expectation for September.

At 44.83, the index of pricing pressure fell more than twenty points from August to its lowest level since January. 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 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 indexes for new orders, shipments and unfilled orders rose but delivery times, inventories and the average workweek fell.

The employment index also fell during September and was negative for the third consecutive month. 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.

The Empire State index of expected business conditions in six months jumped to its highest level since October of last year. The subseries for shipments and employment jumped and the pricing series fell to its lowest level in twelve months.

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.

Determinants of automobile loan default and prepayment from the Federal Reserve Bank of Chicago can be found here.

Empire State Manufacturing Survey September August September '07  2007 2006 2005
General Business Conditions (diffusion index, %)   -7.41 2.77 15.88 17.23 20.24 15.53
Prices Paid 44.83 65.17 35.11 35.64 41.88 44.74
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