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Economy in Brief

Empire State Factory Conditions Slip From October High
by Tom Moeller November 16, 2009

The Federal Reserve Bank of New York reported that its November Empire State Factory Index of General Business Conditions slipped to 23.51 during November. Nevertheless, that level still remained near the highest level since 2004. The latest reading compares to sharply negative levels this past winter and suggests positive growth in factory sector activity. The latest level fell short of Consensus expectations for a reading of 30.0.

The figure is a diffusion index. Since the series' inception in 2001, there has been a 75% correlation between its level and the three-month change in U.S. factory sector industrial production. 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 series dates back only to 2001.

The new orders component fell to 16.66 from its October high. The shipments index also fell as did the employment index to a slim 1.32 from its highest level since 2007. In the history of the NY employment index, there has been an 87% correlation between the employment index and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department. The workweek index also fell m/m but remained significantly higher than the February low.

The prices paid index eased to its lowest level since July and remained down sharply from all of last year. Since inception in 2001, there has been a 77% 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 rose during November rose to its highest level since early-2004. The subseries for new orders, employment, prices and capital expenditures each rose. The inventory subseries rose sharply to it highest since early last year.

The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State. Participants from across the state in a variety of industries respond to a questionnaire and report the change in 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.

Today's speech by Fed Chairman Ben S. Bernanke On the Outlook for the Economy and Policy can be found here here.

Empire State Manufacturing Survey November October November '08  2008 2007 2006
General Business Conditions (diffusion index, %)   23.51 34.57 -24.93 -10.10 17.23 20.24
   New Orders 16.66 30.82 -22.29 -6.25 15.71 20.11
   Employment 1.32 10.39 -28.92 -5.36 11.28 12.62
Prices Paid 10.53 19.48 20.48 46.99 35.64 41.88
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