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Economy in Brief

Empire State Factory Index Remains Positive
by Tom Moeller  March 17, 2014

The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions for March improved to 5.61 from 4.48 during February. The latest figure roughly equaled expectations for a level of 6.0, 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 also moved up this month to a level of 51.7. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has a 67% correlation with the quarterly change in real GDP.

Improvement in the overall index this month reflected modest rebounds in the new orders and shipments indexes while the average workweek series rose for the third straight month. The inventories figure jumped to its highest level since May 2011. The number of employees series, however, declined to its lowest level in three months. During the last ten years there has been a 75% correlation between the jobs index and the m/m change in factory sector payrolls. Also working lower were the unfilled orders and delivery time indexes.

The prices paid index declined to its lowest level in three months. Twenty four percent of respondents reported paying higher prices while three percent paid less. During the last ten years, there has been a 70% 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 to 33.21, its lowest level since July. Lower readings for inventories, employment, new orders, shipments, unfilled orders and delivery times were countered by higher figures for capital expenditures, technology spending, prices paid and the average workweek.

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 Mar Feb Jan Mar'13 2013 2012 2011
General Business Conditions (ISM Adjusted) 51.7 50.9 53.3 50.7 50.0 51.8 51.8
General Business Conditions (Diffusion Index, %) 5.61 4.48 12.51 6.45 3.82 4.29 4.48
 New Orders 3.13 -0.21 10.98 5.80 1.13 1.47 4.04
 Shipments 3.97 2.13 15.52 5.39 4.49 11.22 9.47
 Unfilled Orders -16.47 -6.25 -8.54 -2.15 -8.74 -8.83 -5.29
 Delivery Time -3.53 1.25 -8.54 -2.15 -3.52 -0.30 -0.91
 Inventories 7.06 -5.00 2.44 -5.38 -5.73 -2.91 -1.80
 Number of Employees 5.88 11.25 12.20 3.23 3.73 8.62 6.68
 Prices Paid 21.18 25.00 36.59 25.81 21.53 24.71 40.66
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