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Economy in Brief

Empire State Factory Index Falls Sharply
by Tom Moeller  June 15, 2012

The Empire State Factory Index of General Business Conditions for June retraced all of this year's improvement with a decline to 2.29 versus an unrevised 17.09 in May. Consensus expectations had been for improvement 14.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure also fell sharply to 51.1, its lowest since November. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

All of the component series deteriorated this month led by a lower shipments figure which was at its lowest since October. That was followed by a lower price reading of 19.59. During the last ten years there has been a 62% correlation between the index and the 3-month change in the intermediate goods PPI. The decline in the inventory figure was into negative territory and the unfilled orders series was negative as it has been for a year.

Lesser m/m declines were logged by new orders, also to it lowest since November, and employment to its lowest since February. During the last ten years there has been a 76% correlation by the jobs index and the m/m change in factory sector payrolls. The average workweek figure was zero for the second consecutive month.

Looking ahead, the Empire State index of expected business conditions in six months again fell sharply to its lowest since October. The decline was led by lower readings for prices, new orders and shipments. The figures for employment, technology spending and capital expenditure improved.

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 Jun May Apr Jun'10 2011 2010 2009
General Business Conditions (ISM Adjusted) 51.1 55.8 53.8 50.1 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) 2.29 17.09 6.56 -5.34 4.33 13.85 -2.78
 New Orders 2.18 8.32 6.48 -2.38 3.99 9.93 -2.51
 Shipments 4.81 24.14 6.41 -3.00 9.39 11.61 2.81
 Unfilled Orders -5.15 -4.82 -7.23 0.00 -5.29 -6.58 -13.36
 Delivery Time 0.00 0.00 4.82 -3.06 -0.91 -2.87 -8.18
 Inventories -8.25 4.82 1.20 1.02 -1.80 -1.48 -22.89
 Number of Employees 12.37 20.48 19.28 10.20 6.68 14.29 -17.28
 Prices Paid 19.59 37.35 45.78 56.12 40.66 29.63 1.33
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