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Economy in Brief

Empire State Factory Index Shows Moderation In Activity
by Tom Moeller  April 16, 2012

The Empire State Factory Index of General Business Conditions for April fell to 6.56 from an unrevised 20.21 in March. Consensus expectations had been for a lesser decline to 18.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 53.8, its lowest level since December. 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 weakness. This month, the figures for new orders, shipments, unfilled orders, and delivery times each were down. Offsetting these declines was a rise in inventories and in the employment index to its highest since late-2006. 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. Also to the downside was the prices paid index which slipped m/m but remained up sharply versus its November low. During the last ten years there has been a 62% correlation between the index and the 3-month change in the intermediate goods PPI.

Looking ahead, the Empire State index of expected business conditions in six months fell for the third straight month. The decline was led by lower readings for employment, technology spending, prices paid and delivery times.

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 Apr Mar Feb Apr'10 2011 2010 2009
General Business Conditions (ISM Adjusted) 53.8 54.6 54.1 55.9 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 6.56 20.21 19.53 17.90 4.33 13.85 -2.78
 New Orders 6.48 6.84 9.73 17.03 3.99 9.93 -2.51
 Shipments 6.41 18.21 22.79 21.02 9.39 11.61 2.81
 Unfilled Orders -7.23 -1.23 -7.06 2.56 -5.29 -6.58 -13.36
 Delivery Time 4.82 7.41 1.18 -1.28 -0.91 -2.87 -8.18
 Inventories 1.20 0.00 -4.71 -1.28 -1.80 -1.48 -22.89
 Number of Employees 19.28 13.58 11.76 23.08 6.68 14.29 -17.28
 Prices Paid 45.78 50.62 25.88 57.69 40.66 29.63 1.33
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