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Economy in Brief

Empire State Manufacturing Index Increases; Prices Improve
by Tom Moeller  November 15, 2018

The Empire State Manufacturing Index of General Business Conditions rose to 23.3 in November, the highest level in three months. This survey has been range-bound for roughly the last year. The Action Economics Forecast Survey expected a reading of 20.0. The Empire State 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 increased to 57.8 from 56.4. It was the highest level since June. During the last ten years, the index has had a 69% correlation with the quarter-to-quarter change in real GDP.

Most of the component series improved modestly including a surge in the shipments index to roughly the highest level of the expansion. The unfilled orders and inventories series also gained. The employment index rose slightly. During the last ten years, there has been a 77% correlation between the employment index and the month-to-month change in factory sector payrolls. An improved 24% of respondents reported increased employment, while 10% showed a decrease. The employee workweek reading increased to 9.2 from its 15-month low.

Deterioration was observed in just two of the component indexes. The new orders series slipped m/m, but has been roughly stable for the last several months. The delivery times index has fallen sharply since March, indicating quicker delivery times.

The prices paid index ticked higher, but recovered little of the decline during the last several months. Forty-eight percent of respondents indicated increased prices, while just four percent reported a decrease. Prices received fell to the lowest level since December of last year.

The series measuring expectations for business conditions in six months increased, but remained sharply beneath its high registered nine months earlier. Expected prices paid increased to the highest level since early in 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.

Empire State Manufacturing Survey Nov Oct Sep Nov'17 2017 2016 2015
General Business Conditions (Diffusion Index, %, SA) 23.3 21.1 19.0 20.9 16.1 -2.6 -2.3
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 57.8 56.4 56.0 56.1 54.6 48.2 48.8
  New Orders 20.4 22.5 16.5 21.3 14.6 -0.8 -5.6
  Shipments 28.0 26.3 14.3 19.2 15.9 1.9 4.0
  Unfilled Orders 0.0 -8.4 4.9 -4.6 1.9 -8.8 -10.5
  Delivery Time 4.4 5.0 6.5 -2.3 6.1 -4.8 -5.3
  Inventories 10.9 0.8 8.9 4.6 1.5 -9.6 -7.1
  Number of Employees 14.1 9.0 13.3 18.2 8.3 -5.1 2.3
  Average Employee Workweek 9.2 0.2 11.5 8.5 4.9 -5.2 -4.8
  Prices Paid 44.5 42.0 46.3 24.6 29.0 15.7 8.8
  Prices Received 13.1 14.3 16.3 9.2 11.0 0.7 1.2
Expectations 6 Months Ahead 33.6 29.0 30.3 49.8 42.6 29.0 30.3
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