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Economy in Brief

Empire State Factory Index Deteriorates
by Tom Moeller  April 15, 2013

Forward momentum in factory sector activity is losing steam. The Federal Reserve Bank of New York reported that the Empire State Factory Index of General Business Conditions declined to 3.05 this month from an unrevised 9.24 in March. The figure follows its recent rise to 10.04 in February. Any number above 50 indicates positive growth in factory sector activity. The latest fell short of Consensus expectations for 7.0. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 50.2. Though down sharply for two months, it continued to indicate positive growth. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.

Weakness in the overall index was paced by lower shipments and new orders readings. Unfilled orders and delivery times fell as well. To the upside was employment. During the last ten years there has been a 76% correlation between the jobs index and the m/m change in factory sector payrolls. Also gaining ground were the inventories and employee workweek figures.

The prices paid reading also improved to 28.41, its highest level since May. Thirty two percent of respondents reported paying higher prices while three percent 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 slipped to 31.95 and reversed two months of increase. Lower readings for shipments and prices received offset higher indexes for new orders, the number of employees 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 Apr Mar Feb Apr'12 2012 2011 2010
General Business Conditions (ISM Adjusted) 50.2 51.2 53.7 53.5 51.8 51.8 52.9
General Business Conditions (Diffusion Index, %) 3.05 9.24 10.04 6.40 4.24 4.47 13.86
 New Orders 2.20 8.18 13.31 4.81 1.38 4.04 9.96
 Shipments 0.75 7.76 13.08 4.51 11.13 9.51 11.75
 Unfilled Orders -3.41 -2.15 -2.02 -7.23 -8.83 -5.29 -6.58
 Delivery Time -3.41 -2.15 2.02 4.82 -0.30 -0.91 -2.87
 Inventories -4.55 -5.38 0.00 1.20 -2.91 -1.80 -1.48
 Number of Employees 6.82 3.23 8.08 19.28 8.62 6.68 14.29
 Prices Paid 28.41 25.81 26.26 45.78 24.71 40.66 29.63
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