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Economy in Brief

Empire State Factory Index Rebounds To Highest Level Since 2012
by Tom Moeller  January 15, 2014

The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions for January rose sharply to 12.51 from a revised December reading of 2.22. The figure was at its highest level since May 2012 and outpaced expectations for a level of 3.3, according to the Action Economics Forecast Survey. Data were revised to reflect new seasonal factors.

Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure rose sharply to 53.3, also its highest level since May 2012. An improving level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has a 63% correlation with the quarterly change in real GDP.

Improvement in the overall index this month reflected broad-based component gains. Inventories and unfilled orders rebounded after sharp December declines. New orders surged to the highest level since May 2011 while shipments landed at nearly the highest level since November 2012. The employment reading rebounded to the highest reading since August 2012. 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 length of the average workweek reading made up declines in the prior two months.

The prices paid index jumped to its highest level since May 2012. Thirty eight percent of respondents reported paying higher prices while 1 percent paid less. During the last ten years, there has been a 67% 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 37.51, its lowest level since August. Lower readings for shipments and prices where countered by higher indexes for orders, employment 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 Jan Dec Nov Jan'13 2013 2012 2011
General Business Conditions (ISM Adjusted) 53.3 47.2 49.3 47.4 50.0 51.8 51.8
General Business Conditions (Diffusion Index, %) 12.51 2.22 0.83 -7.93 3.82 4.29 4.48
 New Orders 10.98 -1.69 -3.46 -8.48 1.13 1.47 4.04
 Shipments 15.52 4.69 1.46 -2.13 4.49 11.22 9.47
 Unfilled Orders -8.54 -24.10 -17.11 -7.53 -8.74 -8.83 -5.29
 Delivery Time -8.54 -9.64 -3.95 -2.15 -3.52 -0.30 -0.91
 Inventories 2.44 -21.69 -1.32 -11.83 -5.73 -2.91 -1.80
 Number of Employees 12.20 0.00 0.00 -4.30 3.73 8.62 6.68
 Prices Paid 36.59 15.66 17.11 22.58 21.53 24.71 40.66
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