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Economy in Brief

Empire State Factory Index Indicates Lower Activity
by Tom Moeller  October 15, 2012

The Empire State Factory Index of General Business Conditions for October continued to suggest lower levels of activity. At -6.16 the figure was improved slightly from September but remained near the lowest level of the economic recovery. Consensus expectations had been for m/m improvement to -5.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure declined sharply to 47.7, its lowest since September of last 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 went negative for the first time in twelve months. 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, delivery times collapsed suggesting quicker delivery speeds and more economic slack. The shipments index turned negative along with inventories.

The reading for prices retreated to 17.20. Twenty four percent of respondents indicated paying higher prices while 6% paid lower. During the last ten years there has been a 64% 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 pulled back to 19.42, near its lowest in a year. The decline was led by lower readings for employment, the length of the workweek and capital expenditures.

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 Oct Sep Aug Oct'11 2011 2010 2009
General Business Conditions (ISM Adjusted) 47.7 49.5 50.0 49.6 51.7 52.9 45.2
General Business Conditions (Diffusion Index, %) -6.16 -10.41 -5.85 -7.22 4.33 13.85 -2.78
 New Orders -8.97 -14.03 -5.50 -0.26 3.99 9.93 -2.51
 Shipments -6.40 2.75 4.09 2.89 9.39 11.61 2.81
 Unfilled Orders -18.28 -14.89 -10.59 -4.49 -5.29 -6.58 -13.36
 Delivery Time -4.30 2.13 -7.06 -1.12 -0.91 -2.87 -8.18
 Inventories -2.15 0.00 -8.24 -8.99 -1.80 -1.48 -22.89
 Number of Employees -1.08 4.26 16.47 3.37 6.68 14.29 -17.28
 Prices Paid 17.20 19.15 16.47 22.47 40.66 29.63 1.33
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