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Economy in Brief

Empire State Factory Index Remains Negative
by Tom Moeller  August 15, 2011

The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions fell to -7.72 in August and reversed last month's improvement. The number was weaker than Consensus expectations for improvement to 0.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure slipped marginally to 49.1 from 49.3. The Empire State figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. Since inception in 2001, the business conditions index has a 77% correlation with the quarterly change in real GDP.

The component series were mixed last month. Three of the series were still negative including new orders, unfilled orders and inventories. Though it improved m/m and remained positive, the employment series remained near its recent low. During the last ten years there has been an 82% correlation between the index and the m/m change in the BLS measure of factory sector employment. The index of prices paid also fell to its lowest level since December.

The Empire State index of expected business conditions in six months collapsed m/m to 8.70, its lowest level since February of 2009. Weakest were the subseries for new orders, capital spending and technology spending.

The Empire State data is available in Haver's SURVEYS database. The Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components. The ISM-adjusted headline index is calculated by Haver Analytics using the underlying response data from each survey to construct an overall index using the ISM methodology. This provides for better comparability across regions with the national ISM index. The series date back only to 2001. The Consensus expectation figure is in Haver's AS1REPNA database.

Empire State Manufacturing Survey Aug Jul Jun Aug'10 2010 2009 2008
General Business Conditions (ISM Adjusted) 49.1 49.3 49.7 50.7 52.9 45.2 47.7
General Business Conditions (diffusion index, %) -7.72 -3.76 -7.79 7.21 13.80 -2.81 -9.96
 New Orders -7.82 -5.45 -3.61 -0.81 9.93 -2.51 -6.23
 Shipments 3.01 2.22 -8.02 -9.21 11.66 2.80 0.36
 Unfilled Orders -15.22 -12.22 0.00 -10.00 -6.58 -13.36 -8.72
 Delivery Time 0.00 1.11 -3.06 0.00 -2.87 -8.18 -3.63
 Inventories -7.61 -5.56 1.02 2.86 -1.48 -22.89 -7.87
 Employment 3.26 1.11 10.20 7.94 14.29 -17.28 -5.36
 Prices Paid 28.26 43.33 56.12 20.00 29.63 1.33 46.99
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