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Economy in Brief

Empire State Business Conditions Show Further Gain
by Tom Moeller April 16, 2010

Forward momentum is building behind business conditions in the Northeast region of the country. The Federal Reserve Bank of New York reported that its April Empire State Factory Index of General Business Conditions rose to its highest level in six months. As a result it was near the highest since 2004. At 31.86, the diffusion index was up from its recession low of -32.29 in March 2009. The latest level suggests positive growth in factory sector activity and it beat Consensus expectations for a reading of 24.0.

The figure is a diffusion index. Since the series' inception in 2001, there has been a 74% correlation between its level and the three-month change in U.S. factory sector 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.

Amongst the separate survey questions, shipments and inventories rose strongly. Also strong was the employment index which rose to 20.25, near its highest since 2004 There has been an 87% correlation between the employment index and the three-month growth in factory sector employment as reported by the Labor Department.

The prices paid index rose m/m to 41.77, its highest since September 2008. Since inception there has been a 76% 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 held steady m/m and was near the highest since early-2004. The capital expenditure and technology spending series both remained near the highest levels since the recession began.

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. Each index is seasonally adjusted. 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 April March February April '09  2009 2008 2007
General Business Conditions (diffusion index, %)   31.86 22.86 24.91 -14.59 -2.76 -9.97 17.22
   New Orders 29.49 25.43 8.78 -3.99 -2.52 -6.22 15.70
   Inventories 11.39 4.94 0.00 -35.96 -22.89 -7.87 -3.95
   Employment 20.25 12.35 5.56 -28.09 -17.28 -5.36 11.28
Prices Paid 41.77 29.63 31.94 -14.61 1.33 46.99 35.64
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