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Economy in Brief

Empire State Factory Index Falls To Its Recovery Low
by Tom Moeller  September 17, 2012

Industrial sector activity continues to soften. The Empire State Factory Index of General Business Conditions for September fell to -10.41, its lowest level of the economic recovery. Consensus expectations had been for m/m improvement to -2.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure also fell sharply to 49.5, its lowest in a year. Since inception in 2001, the business conditions index has had a 64% correlation with the quarterly change in real GDP.

Component index declines continued across the board. Employment fell sharply m/m to 4.26, its lowest level this year. During the last ten years there has been a 76% correlation between the jobs index and the m/m change in factory sector payrolls. Elsewhere, new orders collapsed along with shipments to the lowest readings since 2011.

The reading for prices rose to 19.15, its highest level since June. Twenty four percent of respondents indicated paying higher prices while 5% paid lower. 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 recovered to its highest since May. The rise was led by new orders, inventories and delivery times while unfilled orders collapsed.

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 Sep Aug Jul Sep '11 2011 2010 2009
General Business Conditions (ISM Adjusted) 49.5 50.0 52.5 46.6 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) -10.41 -5.85 7.39 -7.43 4.33 13.85 -2.78
 New Orders -14.03 -5.50 -2.69 -7.52 3.99 9.93 -2.51
 Shipments 2.75 4.09 10.28 -8.28 9.39 11.61 2.81
 Unfilled Orders -14.89 -10.59 -13.58 -7.61 -5.29 -6.58 -13.36
 Delivery Time 2.13 -7.06 -1.23 -1.09 -0.91 -2.87 -8.18
 Inventories 0.00 -8.24 0.00 -11.96 -1.80 -1.48 -22.89
 Number of Employees 4.26 16.47 18.52 -5.43 6.68 14.29 -17.28
 Prices Paid 19.15 16.47 7.41 32.61 40.66 29.63 1.33
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