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Economy in Brief

Empire State Manufacturing Index Declines to a Still Elevated Level
by Gerald D. Cohen  July 16, 2018

The Empire State Manufacturing Index of General Business Conditions decreased to 22.6 in July, from an eight-month high of 25.0 in June. The Action Economics Forecast Survey expected a 21.0 reading. 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 decreased to 55.2, from 58.2, the highest reading since March 2006. During the last ten years, the index has had a 68% correlation with the quarter-on-quarter change in real GDP.

All of the components of the Empire State Survey weakened this month, though most of them remain at elevated levels. New orders and shipments declined to 18.2 and 14.6 respectively, unfilled orders showed a 0.0 reading and delivery times eased to 6.0. The inventory index fell to -4.3 near its median level of -3.9.

The number of employees edged down to 17.2 from June's six-month high of 19.0. 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 a slightly higher 24.3% of respondents reported increased employment, the share reporting a decrease rose to 7.1%. The employee workweek reading declined to 5.6.

The prices paid index fell 10 points to 42.7, but remains well above its October 2015 low of 0.9. Forty-four percent of respondents indicated increased prices, while just two percent reported a decline. Prices received edged down to 22.2 from June's seven-year high of 23.3.

The series measuring expectations of business conditions in six months strengthened declined to 31.1 meaningfully below February's six-year high of 50.5. Seven of the expectations series declined in July, while four increased.

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 Jul Jun May Jul'17 2017 2016 2015
General Business Conditions (Diffusion Index, %, SA) 22.6 25.0 20.1 12.7 16.1 -2.6 -2.3
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 55.2 58.2 56.8 53.4 54.6 48.2 48.8
  New Orders 18.2 21.3 16.0 13.4 14.6 -0.8 -5.6
  Shipments 14.6 23.5 19.1 10.7 15.9 1.9 4.0
  Unfilled Orders 0.0 9.3 5.0 -4.7 1.9 -8.8 -10.5
  Delivery Time 6.0 13.2 13.7 4.7 6.1 -4.8 -5.3
  Inventories -4.3 5.4 10.1 2.4 1.5 -9.6 -7.1
  Number of Employees 17.2 19.0 8.7 2.9 8.3 -5.1 2.3
  Average Employee Workweek 5.6 12.0 11.1 -0.4 4.9 -5.2 -4.8
  Prices Paid 42.7 52.7 54.0 21.3 29.0 15.7 8.8
  Prices Received 22.2 23.3 23.0 11.0 11.0 0.7 1.2
Expectations 6 Months Ahead 31.1 38.9 31.1 36.6 42.6 29.0 30.3
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