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Economy in Brief

Empire State Factory Index Weakens
by Tom Moeller  August 15, 2012

The Empire State Factory Index of General Business Conditions for August fell to -5.85, its lowest level since October. Consensus expectations had been for m/m stability at 7.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure also fell sharply 50.0, its lowest since November. Since inception in 2001, the business conditions index has a 64% correlation with the quarterly change in real GDP.

Lower component index readings were logged across the board. Employment fell moderately m/m to 16.47. During the last ten years there has been a 76% correlation by the jobs index and the m/m change in factory sector payrolls. Elsewhere, new orders fell to its second consecutive negative reading and shipments were the lowest since October 2011. 

The reading for prices paid of 16.47 made up most of its July decline. 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 to its lowest since October. The decline was led by a collapse in new orders, shipments & employment.

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 Aug Jul Jun Aug '11 2011 2010 2009
General Business Conditions (ISM Adjusted) 50.0 52.5 51.1 49.4 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) -5.85 7.39 2.29 -6.63 4.33 13.85 -2.78
 New Orders -5.50 -2.69 2.18 -5.74 3.99 9.93 -2.51
 Shipments 4.09 10.28 4.81 4.23 9.39 11.61 2.81
 Unfilled Orders -10.59 -13.58 -5.15 -15.22 -5.29 -6.58 -13.36
 Delivery Time -7.06 -1.23 0.00 0.00 -0.91 -2.87 -8.18
 Inventories -8.24 0.00 -8.25 -7.61 -1.80 -1.48 -22.89
 Number of Employees 16.47 18.52 12.37 3.26 6.68 14.29 -17.28
 Prices Paid 16.47 7.41 19.59 28.26 40.66 29.63 1.33
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