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Economy in Brief

Empire State Factory Index Improves
by Tom Moeller  May 15, 2012

The Empire State Factory Index of General Business Conditions for May improved to 17.09 from an unrevised 6.56 in April. Consensus expectations had been for a rise to 9.3. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure improved to 55.8, its highest in twelve months. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

The component series showed wide-spread. improvement. This month, the figures for new orders, shipments, unfilled orders and inventories rose. In addition, the employment index again rose. 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 declined sharply m/m but remained up 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 sharply. The decline was led by lower readings for new orders, shipments, employment, technology spending and capital expenditure.

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 May Apr Mar May'10 2011 2010 2009
General Business Conditions (ISM Adjusted) 55.8 53.8 54.6 57.7 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 17.09 6.56 20.21 12.13 4.33 13.85 -2.78
 New Orders 8.32 6.48 6.84 14.46 3.99 9.93 -2.51
 Shipments 24.14 6.41 18.21 24.91 9.39 11.61 2.81
 Unfilled Orders -4.82 -7.23 -1.23 9.68 -5.29 -6.58 -13.36
 Delivery Time 0.00 4.82 7.41 2.15 -0.91 -2.87 -8.18
 Inventories 4.82 1.20 0.00 10.75 -1.80 -1.48 -22.89
 Number of Employees 20.48 19.28 13.58 24.73 6.68 14.29 -17.28
 Prices Paid 37.35 45.78 50.62 69.89 40.66 29.63 1.33
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