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Economy in Brief

Empire State Factory Index Remains Negative
by Tom Moeller  December 17, 2012

The Empire State Factory Index of General Business Conditions was negative for the fifth consecutive month. The December reading of -8.10 was nearly the lowest level of the economic recovery. Consensus expectations had been for m/m improvement to -1.0. The Fed indicated that revenues in October and November were 7% and 5%, respectively, lower than they would have been due to superstorm Sandy. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure declined to 48.1, just above 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.

The shipments figure remained positive, as it has mostly been for more than a year. However, the other index levels were broadly negative. Employment was negative for the third consecutive month. During the last ten years there has been a 76% correlation between the jobs index and the m/m change in factory sector payrolls. New orders were negative for the fifth month in the last six.

The reading for prices paid improved slightly m/m to 6.13 but remained sharply lower than its highs earlier this year. Twenty percent of respondents indicated paying higher prices while 4% paid less. 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 improved to 18.66. However, it still was near its lowest in a year. Component index readings were broadly higher except inventories & technology spending. The shipments and new orders series soared.

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 Dec Nov Oct Dec'11 2012 2011 2010
General Business Conditions (ISM Adjusted) 48.1 49.0 47.7 52.5 51.8 51.7 52.9
General Business Conditions (Diffusion Index, %) -8.10 -5.22 -6.16 8.19 4.23 4.33 13.85
 New Orders -3.70 3.08 -8.97 5.99 1.29 4.00 9.88
 Shipments 8.83 14.59 -6.40 20.06 11.02 9.39 11.61
 Unfilled Orders -6.45 -11.24 -18.28 -15.12 -8.83 -5.29 -6.58
 Delivery Time -2.15 -1.12 -4.30 0.00 -0.30 -0.91 -2.87
 Inventories -11.83 -12.36 -2.15 -3.49 -2.91 -1.80 -1.48
 Number of Employees -9.68 -14.61 -1.08 2.33 8.62 6.68 14.29
 Prices Paid 16.13 14.61 17.20 2.42 24.71 40.66 29.63
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