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Economy in Brief

Empire State Manufacturing Index Weakens
by Tom Moeller  April 16, 2018

The Empire State Manufacturing Index of General Business Conditions declined to 15.8 during April after jumping to 22.5 in March. Expectations had been for 18.6 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.

Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The calculated figure declined to 55.6 from 57.5. During the last ten years, the index had a 69% correlation with the quarter-on-quarter change in real GDP.

Most of the series in the Empire State Survey deteriorated in April. The new orders index fell to 9.0 in April from 16.8, its lowest level since May 2017. The shipments index retraced most of its March increase with a decline to 17.5. Delivery times eased to 15.6 from 16.2, but still indicated nearly the slowest product delivery speeds of the recovery. The inventory index rose to 8.1, the highest level in three months.

The number of employees reading fell to 6.0, the lowest level in three months. During the last ten years, there has been a 77% correlation between the employment index and the month-on-month change in factory sector payrolls. While 16% of respondents reported a higher payroll level, 10% reported a lower hiring level. Working the other way, the employee workweek reading increased sharply to 16.9, the highest level since May 2009.

The prices paid index eased to 47.4, backing away from its highest level since March 2012. Forty-nine percent of respondents indicated increased prices, while just two percent reported a decline. Prices received also fell slightly to 20.7 from its roughly six-year peak.

Accompanying the decline in optimism about current conditions, the series measuring expectations of business conditions in six months plummeted to 18.3 in April from 44.1 in March. It was the lowest level in nearly two years. Most of the expectation series declined precipitously, except prices paid and technology spending.

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 Apr Mar Feb Apr'17 2017 2016 2015
General Business Conditions (Diffusion Index, %, SA) 15.8 22.5 13.1 4.1 16.1 -2.6 -2.3
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 55.6 57.5 55.3 54.7 54.6 48.2 48.8
  New Orders 9.0 16.8 13.5 7.3 14.6 -0.8 -5.6
  Shipments 17.5 27.0 12.5 12.8 15.9 1.9 4.0
  Unfilled Orders 3.7 12.7 4.9 12.4 1.9 -8.8 -10.5
  Delivery Time 15.6 16.2 11.1 16.1 6.1 -4.8 -5.3
  Inventories 8.1 5.6 4.9 3.6 1.5 -9.6 -7.1
  Number of Employees 6.0 9.4 10.9 6.9 8.3 -5.1 2.3
  Average Employee Workweek 16.9 5.9 4.6 6.8 4.9 -5.2 -4.8
  Prices Paid 47.4 50.3 48.6 32.8 29.0 15.7 8.8
  Prices Received 20.7 22.4 21.5 12.4 11.0 0.7 1.2
Expectations 6 Months Ahead 18.3 44.1 50.5 39.4 42.6 29.0 30.3
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