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Economy in Brief

Empire State Factory Index Continues To Show Improvement
by Tom Moeller  September 16, 2013

The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions for September slipped to 6.29 from an unrevised 8.24 in August. The latest figure fell short of expectations for 9.0 according to the Action Economics Forecast Survey. Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure rose to 52.4, its highest level since February. An improving level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 63% correlation with the quarterly change in real GDP.

Improvement in the overall index was led by a sharply higher shipments figure which stood at its highest level since May of last year. The inventories series also jumped and registered its first positive reading in just over twelve months. The new orders figure rose slightly. Offsetting these gains where declines in the delivery times, unfilled orders and employment series. Nevertheless the employment reading remained at its highest level since February. 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 index improved modestly to its highest level since April. A slightly higher 24 percent of respondents reported paying higher prices while a fairly stable 2 percent paid less. 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 jumped to 40.64, its highest level since April of last year. Improved inventories, new orders and shipments series led the gain but employment fell as did 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 Sep Aug Jul Sep'12 2012 2011 2010
General Business Conditions (ISM Adjusted) 52.4 50.8 51.3 50.3 51.8 51.8 52.9
General Business Conditions (Diffusion Index, %) 6.29 8.24 9.46 -7.54 4.24 4.47 13.86
 New Orders 2.35 0.27 3.77 -10.60 1.38 4.04 9.96
 Shipments 16.43 1.47 8.96 7.30 11.13 9.51 11.75
 Unfilled Orders -6.45 -6.02 -8.70 -14.89 -8.83 -5.29 -6.58
 Delivery Time -4.30 -1.20 3.26 2.13 -0.30 -0.91 -2.87
 Inventories 2.15 -3.61 -6.52 0.00 -2.91 -1.80 -1.48
 Number of Employees 7.53 10.84 3.26 4.26 8.62 6.68 14.29
 Prices Paid 21.51 20.48 17.39 19.15 24.71 40.66 29.63
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