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Economy in Brief

Empire State Manufacturing Activity Improves Modestly
by Tom Moeller  February 15, 2019

The Empire State Manufacturing Index of General Business Conditions rose to 8.8 during February, but remained near the lowest level since the middle of 2017. The Action Economics Forecast Survey expected a reading of 8.0 for February. 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 improved to 52.5 following its sharp decline to a two-year low. During the last ten years, the index has had a 66% correlation with the quarter-to-quarter change in real GDP.

Changes in the component series were mixed m/m. New and unfilled orders improved as did the delivery times and inventories indexes, but shipments fell. Each of the figures remained sharply below the 2017 highs.

The employment index continued its recent significant decline, falling to the lowest level since August of 2017 and off from last June's high. A fairly steady 17% of respondents reported increased employment, while a higher 12% showed a decrease. 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. The employee workweek reading declined to the lowest level since October, down sharply from the high last April.

The prices paid index weakened significantly to the lowest level since November 2017, down sharply from the high nine months ago. A lessened 31% of respondents indicated increased prices this month, while a fairly steady four percent reported a decrease. Moving the other way, the prices received index improved to the highest level since June of last year.

The series measuring expectations for business conditions in six months rebounded sharply. It recovered its January decline to the lowest level in nearly three years. Most categories showed improvement.

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'18 2018 2017 2016
General Business Conditions (Diffusion Index, %, SA) 8.8 3.9 11.5 16.4 19.8 16.1 -2.6
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 52.5 51.9 56.2 55.6 56.4 54.6 48.1
  New Orders 7.5 3.5 13.4 14.3 16.5 14.5 -0.9
  Shipments 10.4 17.9 20.3 14.2 20.4 15.9 1.9
  Unfilled Orders -0.7 -7.6 -5.1 4.9 3.5 1.9 -8.8
  Delivery Time 5.0 -2.1 3.2 11.1 9.1 6.1 -4.8
  Inventories -1.4 -7.6 7.1 4.9 5.9 1.5 -9.6
  Number of Employees 4.1 7.4 17.5 11.6 12.4 8.1 -5.1
  Average Employee Workweek 2.5 6.8 6.7 5.1 7.8 4.6 -5.1
  Prices Paid 17.1 35.9 39.7 48.6 45.8 29.0 15.7
  Prices Received 22.9 13.1 12.8 21.5 19.3 11.0 0.7
Expectations 6 Months Ahead 32.3 17.8 30.6 49.4 35.2 42.7 29.0
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