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Economy in Brief

Empire State Factory Index Turns Negative But Expectations Improve
by Tom Moeller   November 15, 2010

In an abrupt turnaround, the Federal Reserve Bank of New York reported that its November Empire State Factory Index of General Business Conditions fell to -11.14, the first negative reading in over one year. The figure was well short of Consensus expectations for +14.0. A sharp drop in the new orders component to -24.38 led the decline with shipments at -6.13. This combination dropped the unfilled orders figure to -9.09, nearly the lowest in a year. The employment reading remained a positive 9.09 though that was down sharply from the recent highs. (During the last ten years there has been an 81% correlation between the jobs index and the m/m change in factory sector payrolls.)

The prices paid index slipped to 22.08. Since inception there has been a 69% correlation between the index of prices paid and the monthly change in the core intermediate materials PPI.

Working the other way, the Empire State index of expected business conditions in six months improved to its highest level since April as all but one 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 Nov Oct Sept Oct. '09 2009 2008 2007
General Business Conditions (diffusion index, %) -11.14 15.73 4.14 22.34 -2.76 -9.97 17.22
 New Orders -24.38 12.90 4.33 16.26 -2.52 -6.22 15.70
 Inventories 0.00 -11.67 1.49 -17.11 -22.89 -7.87 -3.95
 Employment 9.09 21.67 14.93 1.32 -17.28 -5.36 11.28
 Prices Paid 22.08 30.00 22.39 10.53 1.33 46.99 35.64
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