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Economy in Brief

Empire State Factory Index Remains Under Pressure
by Tom Moeller  October 17, 2011

The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions ticked up to -8.48 in October. Nevertheless it remained roughly where it's been since June. The number was weaker than Consensus expectations for -4.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure rose to 49.9 and recovered its September drop. 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 65% correlation with the quarterly change in real GDP.

The component series were mostly improved last month. New orders and shipments returned to positive territory. The employment series also was positive as it recovered its September deterioration. During the last ten years there has been an 81% correlation between the index and the m/m change in the BLS measure of factory sector employment. Moving the other way, the prices paid index fell to its lowest since September of last year. During the last ten years there has been a 63% correlation between the index and the 3-month change in the intermediate goods PPI.

The Empire State index of expected business conditions in six months fell to its lowest level since February 2009. Performance amongst the subseries was mixed. Capital spending and technology spending both fell to their lowest since 2009.

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 Oct Sep Aug Oct'10 2010 2009 2008
General Business Conditions (ISM Adjusted) 49.9 46.1 49.1 53.2 52.9 45.2 47.7
General Business Conditions (diffusion index, %) -8.48 -8.82 -7.72 12.74 13.80 -2.81 -9.96
 New Orders 0.16 -8.00 -7.82 10.02 9.93 -2.51 -6.23
 Shipments 5.33 -12.88 3.01 18.38 11.66 2.80 0.36
 Unfilled Orders -4.49 -7.61 -15.22 -1.67 -6.58 -13.36 -8.72
 Delivery Time -1.12 -1.09 0.00 -6.67 -2.87 -8.18 -3.63
 Inventories -8.99 -11.96 -7.61 -11.67 -1.48 -22.89 -7.87
 Employment 3.37 -5.43 3.26 11.67 14.29 -17.28 -5.36
 Prices Paid 22.47 32.61 28.26 30.00 29.63 1.33 46.99
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