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Economy in Brief

Empire State Business Conditions Survey Strengthens; Prices Surge
by Tom Moeller  February 15, 2017

The Empire State Manufacturing Index of General Business Conditions for February jumped to 18.7 from 6.5 in January. It was the highest level since September 2014. The Action Economics Forecast Survey expected 7.0. 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 increased to 54.4 from 50.9. It was the highest level since July 2014. During the last ten years, the index posted a 63% correlation with the change in real GDP.

Each of the index components increased this month, notably new orders, shipments and the average workweek. Inventories, unfilled orders and delivery times also rose. The employment index jumped to 2.0, its first positive reading since May. 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 increased to 37.8, the highest level since April 2012. A fairly stable 40.8% of respondents reported paying higher prices, while a lessened 3.1% reported them lower. The prices received index similarly rose to 19.4, its highest point since May 2011.

Expectations of business conditions six months ahead, in contrast, fell to 41.7, its lowest point in three months.

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.

Empire State Manufacturing Survey Feb Jan Dec Feb'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 18.7 6.5 7.6 -14.5 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 54.4 50.9 48.5 47.8 48.2 48.9 52.4
  New Orders 13.5 3.1 10.4 -9.7 -0.7 -5.6 7.9
  Shipments 18.2 7.3 8.6 -8.8 1.8 4.0 12.1
  Unfilled Orders 8.2 -1.7 -10.4 -6.9 -8.8 -10.5 -9.0
  Delivery Time 7.1 -2.5 -7.8 -2.0 -4.8 -5.3 -5.2
  Inventories 3.1 2.5 -13.9 0.0 -9.6 -7.1 -1.8
  Number of Employees 2.0 -1.7 -12.2 -1.0 -5.0 2.7 10.9
  Average Employee Workweek 4.1 -4.2 -7.0 -5.9 -5.4 -5.3 1.4s
  Prices Paid 37.8 36.1 22.6 3.0 15.7 8.8 20.9
Expectations 6 Months Ahead 41.7 49.7 49.7 17.1 29.0 30.3 40.2
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