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Economy in Brief

Empire State Factory Sector Activity Improves
by Tom Moeller  December 15, 2015

The Empire State Factory Index of General Business Conditions improved from its worst level four months ago, although it remained negative. The reading of -4.59 compared to a low of -14.92 in August. The latest figure was near expectations for -6.5 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 improved to 48.0, just above the 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.

Most component series improved this month. New orders rebounded to its best level since July. Shipments turned positive for the first month in four. Vendor deliveries, unfilled orders and inventories each rose, but the employment figure fell sharply to the lowest level since July 2009. During the last ten years, there has been a 72% correlation between the employment series and the m/m change in factory sector payrolls.

The prices paid index eased, but remained above its October low. An improved 14% of respondents reported higher prices but a higher 10% reported them lower. Prices received remained in negative territory.

Expectations for business conditions surged to the highest level since January. The rise was most pronounced for delivery times and unfilled orders, but new orders and shipments also increased. Employment fell after three months of improvement and prices paid weakened slightly.

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.

Empire State Manufacturing Survey Dec Nov Oct Dec'14 2015 2014 2013
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 48.0 47.0 46.3 51.4 49.9 53.4 50.7
General Business Conditions (Diffusion Index, %, SA) -4.59 -10.74 -11.36 -1.23 -2.32 11.83 3.87
 New Orders -5.07 -11.82 -18.91 0.39 -5.61 7.89 1.16
 Shipments 5.51 -4.10 -13.61 2.55 3.98 12.09 4.52
 Unfilled Orders -16.16 -18.18 -15.09 -23.96 -10.52 -9.03 -8.74
 Delivery Time -8.08 -10.91 -11.32 -14.58 -5.32 -5.17 -3.52
 Inventories -12.12 -17.27 -7.55 -11.46 -7.06 -1.80 -5.73
 Number of Employees -16.16 -7.27 -8.49 8.33 2.72 10.85 3.73
 Prices Paid 4.04 4.55 0.94 10.42 8.84 20.90 21.53
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