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Economy in Brief

Empire State Factory Sector Index Eases
by Tom Moeller  June 15, 2015

The Empire State Factory Index of General Business Conditions slipped to -1.98 during June after modest improvement to 3.09 in May. The latest figure from the Federal Reserve Bank of New York was its lowest level since January 2013, remaining well under the 27.41 peak reached last September. The latest compared to expectations for improvement to 5.4 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 eased m/m to 51 .9 and remained below the peak of 55.4 twelve months ago. 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 change in real GDP.

Movement in the component series remained mixed. Deterioration in new orders, shipments, and inventories was offset by improvement in unfilled orders and delivery times. Employment also recovered most of its May decline, though remaining well below the May 2014 peak of 20.88. During the last ten years, there has been a 72% correlation between the index level and the m/m change in factory sector payrolls. The average workweek index improved to its highest level in three months.

The prices paid index remained near its lowest level since July 2012. Fourteen percent of respondents reported paying higher prices, down from 79% in mid-2008. Five 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 declined to 25.84 and roughly matched its three-year low. New orders, shipments, employment, inventories and capital spending each fell sharply. The index of expected prices paid declined modestly to the lowest level since the middle of 2009.

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 dates back to 2001. The Consensus expectation figure can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Jun May Apr Jun'14 2014 2013 2012
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 51.9 52.1 51.7 55.4 52.4 50.0 51.8
General Business Conditions (Diffusion Index, %, SA) -1.98 3.09 -1.19 18.16 11.83 3.87 4.22
 New Orders -2.12 3.85 -6.00 16,63 7.89 1.16 1.46
 Shipments 12.01 14.94 15.23 15.57 12.09 4.52 11.20
 Unfilled Orders -4.81 -11.46 -11.70 -1.08 -9.03 -8.74 -8.83
 Delivery Time -1.92 -10.42 -4.26 1.08 -5.17 -3.52 -0.30
 Inventories 1.92 7.29 2.13 9.68 -1.80 -5.73 -2.91
 Number of Employees 8.65 5.21 9.57 10.75 10.85 3.73 8.62
 Prices Paid 9.62 9.38 19.15 7.20 20.90 21.53 24.71
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