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Economy in Brief

Empire State Factory Sector Index Eases Again; Expectations Stabilize
by Tom Moeller  March 16, 2015

The Empire State Factory Index of General Business Conditions fell 6.90 during March after declining to 7.78 in February. The readings from the Federal Reserve Bank of New York remained well below the 27.41 peak reached last September. The latest roughly matched expectations for 8.0 in 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 slipped to 51.7 from 52.4. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 68% correlation with the quarterly change in real GDP.

Deterioration in the component series was broad-based this month. The new orders figure backpedaled into negative territory for the first time since October, the weakest indication since November 2013. The shipments reading edged lower to its lowest point in three months as did the unfilled orders figure. Delivery times were slightly faster and inventories weakened slightly. Working towards improvement, the employment reading rose to its highest level since May. During the last ten years, there has been a 71% correlation between the index level and the m/m change in factory sector payrolls. Also up, the length of the average workweek recovered to its longest since August following five straight months of deterioration.

The prices paid index backpedaled to the lowest level in three months. Twenty percent of respondents reported paying higher prices while seven percent realized lower prices. 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 improved slightly to 30.72 after plummeting during February. Employment, unfilled orders, inventories and prices paid gained modestly following earlier weakness but expected new orders and shipments fell back to last year's lows.

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 can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Mar Feb Jan Mar'14 2014 2013 2012
General Business Conditions (ISM Adjusted) 51.7 52.4 51.7 51.9 52.4 50.0 51.8
General Business Conditions (Diffusion Index, %) 6.90 7.78 9.95 5.92 11.83 3.87 4.22
 New Orders -2.39 1.22 6.09 3.38 7.89 1.16 1.46
 Shipments 7.93 14.12 9.59 6.10 12.09 4.52 11.20
 Unfilled Orders -13.40 -6.74 -8.42 -16.47 -9.03 -8.74 -8.83
 Delivery Time -2.06 1.12 -5.26 -3.53 -5.17 -3.52 -0.30
 Inventories -5.15 -2.25 -7.37 7.06 -1.80 -5.73 -2.91
 Number of Employees 18.56 10.11 13.68 5.88 10.85 3.73 8.62
 Prices Paid 12.37 14.61 12.63 21.18 20.90 21.53 24.71
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