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Economy in Brief

Empire State Factory Index Reaches Twelve-Month High
by Tom Moeller  April 15, 2011

The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions rose to 21.70, its highest level since April of last year. The figure beat Consensus expectations for a stable reading of 17.3. Nevertheless, the index remained below last year's high of 29.71. These figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting the indicator lower from those reporting the indicator higher. Thus, they have a good correlation with growth in the series covered. Since inception in 2001, the business conditions index has a 78% correlation with the quarterly change in real GDP.

Improvement was greatest in the shipments, new orders, pricing and employment subseries. During the last ten years there has been an 82% correlation between the jobs index and the m/m change in factory sector payrolls. Also, since inception, there has been a 68% correlation between the index of prices paid and the monthly change in the core intermediate materials PPI.

The Empire State index of expected business conditions in six months slipped m/m to 47.44 and was down from the January high of 58.95. A separate series for capital spending improved m/m while the technology index also rose.

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 Apr Mar Feb Mar'10 2010 2009 2008
General Business Conditions (diffusion index, %) 21.70 17.50 15.43 29.71 13.80 -2.81 -9.96
 New Orders 22.34 5.81 11.80 28.10 9.93 -2.51 -6.23
 Inventories -1.28 3.90 9.64 11.39 0.00 -22.89 -7.87
 Employment 23.08 9.09 3.61 20.25 11.78 -17.28 -5.36
 Prices Paid 57.69 53.25 45.78 41.77 29.63 1.33 46.99
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