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Economy in Brief

Empire State Factory Index Increases to Highest Since 2010
by Tom Moeller  February 15, 2012

The February Empire State Factory Index of General Business Conditions improved to 19.53 from January's unrevised 13.48. The Federal Reserve Bank of New York indicated that the increase was to its highest level since June 2010. Consensus expectations had been for a lesser gain to 14.7. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure slipped to 54.1, still its highest level in nearly a year. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

The component series showed scattered improvement. This month, the figures for shipments and delivery times rose. Falling, however, were each of the other components including new and unfilled orders, inventories and employment. 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 slipped after two months of modest improvement. 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 fell modestly from its recent high. The decline was led by lower readings for new orders, shipments and delivery times but prices and employment both rose, the latter to its highest since April. The capital expenditure reading was its highest since January of last year.

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 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 Feb Jan Dec Feb'10 2011 2010 2009
General Business Conditions (ISM Adjusted) 54.1 55.1 52.5 53.7 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 19.53 13.48 8.19 14.69 4.33 13.85 -2.78
 New Orders 9.73 13.70 5.99 11.82 3.99 9.93 -2.51
 Shipments 22.79 21.69 20.06 12.10 9.39 11.61 2.81
 Unfilled Orders -7.06 -5.49 -15.12 -4.82 -5.29 -6.58 -13.36
 Delivery Time 1.18 -3.30 0.00 0.00 -0.91 -2.87 -8.18
 Inventories -4.71 6.59 -3.49 9.64 -1.80 -1.48 -22.89
 Number of Employees 11.76 12.09 2.33 3.61 6.68 14.29 -17.28
 Prices Paid 25.88 26.37 24.42 45.78 40.66 29.63 1.33
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