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Economy in Brief

Empire State Business Conditions Index Recovers
by Tom Moeller  June 15, 2017

Following three months of decline, the Empire State Manufacturing Index of General Business Conditions for June jumped to 19.8 from -1.0 in May. It was the highest level since September 2014. A reading of 4.5 was expected in the Action Economics Forecast Survey. 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 56.1, the highest level in six years. During the last ten years, the index posted a 63% correlation with the change in real GDP.

The new & unfilled orders, shipments and inventory series each surged. The delivery times fell, and indicated the quickest product delivery speeds since January.

The employment index declined to the lowest level since February, but the employee workweek reading recovered its May decline. 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 eased m/m to the lowest level since November. Twenty-six percent of respondents reported paying higher prices, while six percent reported them lower. The prices received index recovered most of its May decline, but remained well below the February peak.

Expectations of business conditions six months ahead increased m/m, but remained below the January peak. The new orders and capital expenditure series increased, but other component indexes fell. Expected prices paid fell to a ten-month low.

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 Jun May Apr Jun'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 19.8 -1.0 5.2 3.7 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 56.1 52.4 55.5 49.9 48.2 48.9 52.4
  New Orders 18.1 -4.4 7.0 8.2 -0.7 -5.6 7.9
  Shipments 22.3 10.6 13.7 8.5 1.8 4.0 12.1
  Unfilled Orders 4.6 -3.7 12.4 -10.2 -8.8 -10.5 -9.0
  Delivery Time 5.4 6.7 16.1 -2.0 -4.8 -5.3 -5.2
  Inventories 7.7 -0.7 3.6 -5.3 -9.6 -7.1 -1.8
  Number of Employees 7.7 11.9 13.9 0.0 -5.0 2.7 10.9
  Average Employee Workweek 8.5 7.5 8.8 -5.1 -5.4 -5.3 1.4s
  Prices Paid 20.0 20.9 32.8 18.4 15.7 8.8 20.9
Expectations 6 Months Ahead 41.7 39.3 39.9 33.3 29.0 30.3 40.2
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