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Economy in Brief

The Empire State Index Reaches New Low
by Tom Moeller March 16, 2009

This month's Empire State Index of manufacturing sector activity, reported by the Federal Reserve Bank of New York, fell to a new low for the series which dates back to 2001. Continued stress was indicated by the reading of -38.23, down from -34.65 in February. The index averaged -10.10 last year and +17.23 during 2007. March's level was lower than Consensus expectations for a reading of -32.0.

The figure is a diffusion index. Since the series' inception in 2001 there has been a 68% correlation between its level and the three-month change in U.S. factory sector industrial production.

Price deflation was the message from the index of pricing pressure which remained negative for the fourth straight month, near the series' low. Since inception in 2001, there has been a 76% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.

The new orders index fell sharply to a new series low of -44.76. That compares to last March's reading of -44.76. More than fifty percent of survey participants reported lower levels of orders while only nine percent reported a higher reading.

The employment index fell slightly and remained near the series' low. In the history of the NY employment index, there has been an 87% correlation between it and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department.

The Empire State index of expected business conditions in six months improved slightly from near the series' low. The subseries for employment and new orders improved slightly. The pricing index was unchanged after having moved into negative territory.

Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components.

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 Empire State data is available in Haver's SURVEYS database.

Empire State Manufacturing Survey March February March1 '08  2008 2007 2006
General Business Conditions (diffusion index, %)   -38.23 -34.65 -19.28 -10.10 17.23 20.24
Prices Paid -14.61 -13.79 50.56 46.99 35.64 41.88
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