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Economy in Brief

Empire State Survey Remains Positive; Prices Surge
by Tom Moeller  January 17, 2017

The Empire State Manufacturing Index of General Business Conditions for January continued to suggest positive economic conditions, though it eased to 6.5 in January from 7.6 in December. It was the third straight positive reading following more than a year's worth of negative figures. A January level of 8.1 had been expected in the Action Economics Forecast Survey. Figures back to 2015 were revised. These data, reported by the Federal Reserve Bank of New York, 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 comparable to the ISM series. The adjusted figure improved to 50.9 from 48.5. It was the highest level since April and also the first to indicate positive growth in the same period. During the last ten years, the index posted a 63% correlation with the change in real GDP.

Amongst the index components, new orders, shipments and inventories each posted positive readings. Other series were negative, but improved versus December. The employment index jumped to -1.7, its least negative figure since August. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls.

The prices paid series jumped to 36.1, the highest level since January 2014. A sharply increased 41.2% of respondents reported paying higher prices, while a fairly steady 5.0% reported them lower. The prices received index similarly surged to 17.6, its highest point since April 2012.

The reading of expected business conditions six months ahead held steady at an elevated 49.7, which represented the highest degree of optimism since January 2012.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Monetary Policy in a Time of Uncertainty is the title of today's speech by Fed Governor Lael Brainard and it can be found here.

Empire State Manufacturing Survey Jan Dec Nov Jan'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 6.5 7.6 2.2 -16.8 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 50.9 48.5 47.3 43.4 48.2 48.9 52.4
  New Orders 3.1 10.4 4.0 -22.4 -0.7 -5.6 7.9
  Shipments 7.3 8.6 8.6 -11.5 1.8 4.0 12.1
  Unfilled Orders -1.7 -10.4 -12.7 -11.0 -8.8 -10.5 -9.0
  Delivery Time -2.5 -7.8 -5.5 -13.0 -4.8 -5.3 -5.2
  Inventories 2.5 -13.9 -23.6 -6.0 -9.6 -7.1 -1.8
  Number of Employees -1.7 -12.2 -10.9 -13.0 -5.0 2.7 10.9
  Average Employee Workweek -4.2 -7.0 -10.9 -6.0 -5.4 -5.3 1.4s
  Prices Paid 36.1 22.6 15.5 16.0 15.7 8.8 20.9
Expectations 6 Months Ahead 49.7 49.7 31.1 10.4 29.0 30.3 40.2
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