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Economy in Brief

Empire State Factory Index Shows Expansion
By Tom Moeller  January 17, 2012

Recovery in the factory sector is gaining legs. That's suggested by the January Empire State Factory Index of General Business Conditions which rose to 13.48 from 8.19. The Federal Reserve Bank of New York indicated that the increase was to its highest level since April. Consensus expectations had been for 10.50. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure rose to 55.1, also its highest level since April. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

The component series showed widespread improvement. This month the figures for new orders, shipments, inventories, unfilled orders and employment each improved. During the last ten years there has been a 76% correlation between the employment index and the m/m change in the BLS measure of factory sector employment. The prices paid index also increased to its highest level since September. During the last ten years there has been a 61% 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 jumped to its best in twelve months. Performance amongst the subseries was broadly improved, including capital and technology spending.

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. The 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. The series date back only to 2001. The Consensus expectation figure is in Haver's AS1REPNA database.

Empire State Manufacturing Survey Jan Dec Nov Jan'10 2011 2010 2009
General Business Conditions (ISM Adj) 55.1 52.5 49.5 54.0 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 13.48 8.19 0.80 11.70 4.33 13.85 -2.78
 New Orders 13.70 5.99 -0.82 11.77 3.99 9.93 -2.51
 Shipments 21.69 20.06 11.70 21.96 9.39 11.61 2.81
 Unfilled Orders -5.49 -15.12 -7.32 -11.58 -5.29 -6.58 -13.36
 Delivery Time -3.30 0.00 0.00 -6.32 -0.91 -2.87 -8.18
 Inventories 6.59 -3.49 -12.20 4.21 -1.80 -1.48 -22.89
 Employment 12.09 2.33 -3.66 8.42 6.68 14.29 -17.28
 Prices Paid 26.37 24.42 18.29 35.79 40.66 29.63 1.33
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