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Economy in Brief

Empire State Factory Index Recovers but Components Weaken
by Tom Moeller  June 17, 2013

The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions rose to 7.84 this month from an unrevised -1.43 in May. The latest figure exceeded Consensus expectations for 0.8. That, however, was the end of the good news in the Bank's report.  Declines in the component series were widespread. Moreover, based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 46.4 from 49.3. A declining level of activity is indicated by a figure below 50. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.

Deterioration in the overall index reflected broad-based component declines, as was the case in May. The unfilled orders, employee workweek and the shipments series showed the greatest m/m deterioration. The new orders, delivery time and inventory numbers fell sharply as well. At zero, the employment figure was its lowest level since January. During the last ten years there has been a 73% correlation between the jobs index and the m/m change in factory sector payrolls.

The prices paid reading notched up slightly but remained near its lowest level since December. A lessened 24 percent of respondents reported paying higher prices while three percent paid less, the most since July. During the last ten years there has been a 66% 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 fell slightly to 24.98 but that was the lowest level since January. Capital spending, the number of employees, shipments, new orders, unfilled orders and delivery times showed large declines.

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 Jun May Apr Jun'12 2012 2011 2010
General Business Conditions (ISM Adjusted) 46.4 49.3 50.2 51.3 51.8 51.8 52.9
General Business Conditions (Diffusion Index, %) 7.84 -1.43 3.05 4.15 4.24 4.47 13.86
 New Orders -6.69 -1.17 2.20 2.28 1.38 4.04 9.96
 Shipments -11.77 -0.02 0.75 6.34 11.13 9.51 11.75
 Unfilled Orders -14.52 -6.82 -3.41 -5.15 -8.83 -5.29 -6.58
 Delivery Time -6.45 -3.41 -3.41 0.00 -0.30 -0.91 -2.87
 Inventories -11.29 -7.95 -4.55 -8.25 -2.91 -1.80 -1.48
 Number of Employees 0.00 5.68 6.82 12.37 8.62 6.68 14.29
 Prices Paid 20.97 20.45 28.41 19.59 24.71 40.66 29.63
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