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Economy in Brief

Empire State Factory Index Improves Further
by Tom Moeller  March 15, 2012

The Empire State Factory Index of General Business Conditions for March rose to 20.21 from February's unrevised 19.53. The Federal Reserve Bank of New York indicated that the index remained at its highest level since June 2010. Consensus expectations had been for a decline to 18.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure rose slightly to 54.6 and made up half of its February decline. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

The component series showed broad-based improvement. This month, the figures for unfilled orders, delivery times and inventories rose. The employment index also increased to its highest since last May. 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. In addition, the prices paid index jumped to its highest level since last June. During the last ten years there has been a 62% correlation between the index and the 3-month change in the intermediate goods PPI. To the downside were the new orders and shipments series.

The Empire State index of expected business conditions in six months fell again. The decline was led by lower readings for new orders, shipments and inventories. Rising were the figures for prices, employment, unfilled orders 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 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 Mar Feb Jan Mar'10 2011 2010 2009
General Business Conditions (ISM Adjusted) 54.6 54.1 55.1 52.4 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 20.21 19.53 13.48 16.16 4.33 13.85 -2.78
 New Orders 6.84 9.73 13.70 7.93 3.99 9.93 -2.51
 Shipments 18.21 22.79 21.69 4.63 9.39 11.61 2.81
 Unfilled Orders -1.23 -7.06 -5.49 2.60 -5.29 -6.58 -13.36
 Delivery Time 7.41 1.18 -3.30 -1.30 -0.91 -2.87 -8.18
 Inventories 0.00 -4.71 6.59 3.90 -1.80 -1.48 -22.89
 Number of Employees 13.58 11.76 12.09 9.09 6.68 14.29 -17.28
 Prices Paid 50.62 25.88 26.37 53.25 40.66 29.63 1.33
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