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Economy in Brief

Empire State Factory Index Shows Broad-based Improvement
by Tom Moeller  February 15, 2013

The Empire State Factory Index of General Business Conditions moved back into positive territory in February following six consecutive months in the red. The increase to 10.04 compared to an unrevised -7.78 in January and beat consensus expectations for -3.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure rose to 53.7, its highest reading in nine months. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.

All of the index components improved this month except prices received, which fell slightly. Notable were the gains in the new orders, shipments and employment indexes. The employment series was its highest in six 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.

The prices paid reading improved m/m to 25.26, its highest level in nine months. Twenty seven percent of respondents indicated paying higher prices while only 1% 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 sharply to 33.07, its highest level since April. Component index readings were mixed. The capital expenditure, technology, employment and prices paid components showed the greatest improvement.

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 Feb Jan Dec Feb'12 2012 2011 2010
General Business Conditions (ISM Adjusted) 53.7 47.5 48.5 53.6 51.8 51.8 52.9
General Business Conditions (Diffusion Index, %) 10.04 -7.78 -7.30 18.31 4.24 4.47 13.86
 New Orders 13.31 -7.18 -3.44 7.93 1.38 4.04 9.96
 Shipments 13.08 -3.08 11.93 19.90 11.13 9.51 11.75
 Unfilled Orders -2.02 -7.53 -6.45 -7.06 -8.83 -5.29 -6.58
 Delivery Time 2.02 -2.15 -2.15 1.18 -0.30 -0.91 -2.87
 Inventories 0.00 -8.60 -11.83 -4.71 -2.91 -1.80 -1.48
 Number of Employees 8.08 -4.30 -9.68 11.76 8.62 6.68 14.29
 Prices Paid 25.26 22.58 16.13 25.88 24.71 40.66 29.63
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