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Economy in Brief

Empire State Factory Index Declines To Near Recovery Low
by Tom Moeller  January 15, 2013

The Empire State Factory Index of General Business Conditions was negative in January for the sixth consecutive month. Moreover, except for one month in 2010, the latest reading of -7.78 was nearly the lowest level of the economic recovery. Consensus expectations had been for -1.9. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure declined to 47.5, also near the lowest of the recovery. Since inception in 2001, the business conditions index has had a 64% correlation with the quarterly change in real GDP.

Most of the index components were negative this month, notably new orders, shipments and delivery times. Employment was negative for the fourth  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.

The prices paid reading improved m/m to 22.58, its highest level since May of last year. Twenty five percent of respondents indicated paying higher prices while just 2% 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 moderately to 20.41. Component index readings were mixed. New orders and inventories rose but prices and employment declined.

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 Jan Dec Nov Jan'12 2012 2011 2010
General Business Conditions (ISM Adjusted) 47.5 48.5 48.9 54.6 51.8 51.8 52.9
General Business Conditions (Diffusion Index, %) -7.78 -7.30 -4.31 12.12 4.24 4.47 13.86
 New Orders -7.18 -3.44 2.93 11.21 1.38 4.04 9.96
 Shipments -3.08 11.93 14.18 18.94 11.13 9.51 11.75
 Unfilled Orders -7.53 -6.45 -11.24 -5.49 -8.83 -5.29 -6.58
 Delivery Time -2.15 -2.15 -1.12 -3.30 -0.30 -0.91 -2.87
 Inventories -8.60 -11.83 -12.36 6.59 -2.91 -1.80 -1.48
 Number of Employees -4.30 -9.68 -14.61 12.09 8.62 6.68 14.29
 Prices Paid 22.58 16.13 14.61 26.37 24.71 40.66 29.63
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