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Economy in Brief

Empire State Factory Sector Activity Continues Lower
by Tom Moeller  October 15, 2015

The Empire State Factory Index of General Business Conditions remained negative during October for the third straight month and was nearly the weakest reading since the recession. The latest reading of -11.36 compared to an unrevised -14.67 in September. These diffusion indexes were the lowest since April 2009. It disappointed expectations for -8.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve of New York and reflect business conditions in New York, northern New Jersey and southern Connecticut.

Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure eased to 44.0, also a six-year low. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 62% correlation with the change in real GDP.

Each of the component series was negative this month. The employment figure remained in negative territory at its lowest point since December 2012. During the last ten years, there has been a 72% correlation between the employment series and the m/m change in factory sector payrolls. New orders and shipments also were near the lowest levels since 2009, while vendor delivery speeds quickened to the fastest pace since December 2014.

The prices paid index declined to 0.94, the lowest point since the recession. Sixteen percent of respondents reported higher prices but a sharply increased 15 percent paid less, the most since June 2009. Prices received fell further into negative territory.

Expectations for business conditions remained stable at the lowest positive level since January 2013. Most of the component series deteriorated m/m except employment and inventories.

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 Action Economics figure can be found in Haver's AS1REPNA database.

The Fed at a Crossroads: Where to Go Next? by William C. Dudley, President & CEO, Federal Reserve Bank of New York is available here.

Empire State Manufacturing Survey Oct Sep Aug Oct'14 2014 2013 2012
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 44.0 44.8 45.0 50.8 52.4 50.0 51.8
General Business Conditions (Diffusion Index, %, SA) -11.36 -14.67 -14.92 8.55 11.83 3.87 4.22
 New Orders -18.91 -12.91 -15.70 -1.01 7.89 1.16 1.46
 Shipments -13.61 -7.98 -13.79 2.67 12.09 4.52 11.20
 Unfilled Orders -15.09 -8.25 -4.55 -4.55 -9.03 -8.74 -8.83
 Delivery Time -11.32 -6.19 -4.55 -5.68 -5.43 -3.52 -0.30
 Inventories -7.55 -18.56 -17.27 2.27 -1.80 -5.73 -2.91
 Number of Employees -8.49 -6.19 1.82 10.23 10.85 3.73 8.62
 Prices Paid 0.94 4.12 7.27 11.36 20.90 21.53 24.71
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