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Economy in Brief

Empire State Business Conditions Improve As Employment Picks Up
by Tom Moeller   October 15, 2010

The Federal Reserve Bank of New York reported that its October Empire State Factory Index of General Business Conditions improved to 15.73 which was the highest level since June. The figure suggests positive growth in factory sector activity and was more-than-double Consensus expectations.

Most of the component series improved m/m, except inventories and the employee workweek. Notable were the gains in the shipments and new orders indexes. Also impressive was the gain in the employment index to near its highest level since 2004. Since inception there has been an 87% correlation between the jobs index level and the m/m change in factory sector payroll employment.

The prices paid index also improved to 30.00 which was its highest level since February. 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 recovered most of the declines of the last two months. Virtually all of the component series improved.

The Empire State data is available in Haver's SURVEYS database. The figures are diffusion indexes. 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.

Empire State Manufacturing Survey October September August Oct. '09  2009 2008 2007
General Business Conditions (diffusion index,%) 15.73 4.14 7.10 33.44 -2.76 -9.97 17.22
 New Orders 12.90 4.33 -2.71 30.81 -2.52 -6.22 15.70
 Inventories -11.67 1.49 2.86 -18.18 -22.89 -7.87 -3.95
 Employment 21.67 14.93 14.29 10.39 -17.28 -5.36 11.28
 Prices Paid 30.00 22.39 20.00 19.48 1.33 46.99 35.64
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