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Economy in Brief

Empire State Business Conditions Improve As Delivery Times Lengthen
by Tom Moeller June 15, 2010

Business must be improving if it takes longer to take delivery from sellers. The Federal Reserve Bank of New York reported that its June Empire State Factory Index of General Business Conditions increased modestly to 19.57 after a sharp May decline. Nevertheless, the June level suggests positive growth in factory sector activity. The latest reading matched Consensus expectations.

Shorter delivery times were the primary impetus for the gain in the overall index. The rise in the delivery-time index was to the highest level since 2004. Also rising modestly were the orders & shipments series though the gains failed to recoup earlier declines. The employment index also gave back increases during the prior two months but remained positive.

The figures are diffusion indexes. Since the series' inception in 2001, there has been a 75% correlation between the overall 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.

The prices paid index fell to 27.16 and reversed all of the gains earlier this year. 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 slipped m/m to its lowest level since July of last year. Virtually all of the component series again fell including capital expenditures and technology spending They're both, however, well above the recession lows.

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 June May April June '09  2009 2008 2007
General Business Conditions (diffusion index,%) 19.57 19.11 31.86 -9.51 -2.76 -9.97 17.22
New Orders 17.53 14.30 29.49 -7.58 -2.52 -6.22 15.70
Inventories -1.23 1.32 11.39 -25.29 -22.89 -7.87 -3.95
Employment 12.35 22.37 20.25 -21.84 -17.28 -5.36 11.28
Prices Paid 27.16 44.74 41.77 -5.75 1.33 46.99 35.64
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