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Economy in Brief

Empire State Manufacturing Activity & Expectations Improve Slightly
by Tom Moeller  October 15, 2019

The Empire State Manufacturing Index of General Business Conditions for October rose to 4.0 after falling to 2.0 in September. A reading of 1.0 had been expected in the Action Economics Forecast Survey. A slightly improved 30% of respondents reported that conditions had improved in October from September while an increased 26% reported a worsening. 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.

Using the Empire State figures, Haver Analytics calculates a seasonally adjusted index that is comparable to the headline ISM index. The ISM-adjusted index eased to 52.1 this month from 52.8 in September, but remained higher than June's low of 48.4. A reading of 50 or greater indicates expansion in business activity. During the past 15 years, there has been a 64% correlation between the index level (which measures change) and the quarter-to-quarter change in real GDP.

The component series in the Empire State survey continued to demonstrate a mixed performance. The unfilled orders series fell m/m as did inventories. The delivery times series also declined and indicated the quickest product delivery time since June. The shipments series improved to the highest level since May. New orders were steady but were improved versus the negative readings in June and July.

Labor market conditions turned in a mixed performance as the jobs index eased to 7.6, though it continued to indicate a rising level of hires. Seventeen percent of respondents reported higher job levels while ten percent reported a decline. The average workweek index rose to the highest level since September of last year.

The prices paid index reversed its September improvement and fell to the lowest level since July 2017. A lessened 29% of respondents reported higher prices while a fairly steady six reported a decline. The prices received index eased moderately.

The series measuring expectations for business conditions in six months recaptured a piece of its sharp September decline. Each of the components remained weak except the prices paid series. The capital spending series also remained lackluster.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percentage of respondents reporting declines from the percentage 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 Oct Sep Aug Oct'18 2018 2017 2016
General Business Conditions (Diffusion Index, %, SA) 4.0 2.0 4.8 20.0 19.8 16.1 -2.6
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 52.1 52.8 52.0 55.9 56.4 54.6 48.1
  New Orders 3.5 3.5 6.7 20.8 16.5 14.5 -0.9
  Shipments 13.0 5.8 9.3 24.1 20.4 15.9 1.9
  Unfilled Orders -12.5 -2.6 -9.7 -8.4s 3.5 1.9 -8.8
  Delivery Time -2.5 0.7 0.0 5.0 9.1 6.1 -4.8
  Inventories -0.6 8.5 5.8 0.8 5.9 1.5 -9.6
  Number of Employees 7.6 9.7 -1.6 8.5 12.4 8.1 -5.1
  Average Employee Workweek 8.3 1.7 -1.3 1.4 7.8 4.6 -5.1
  Prices Paid 23.1 29.4 23.2 42.0 45.8 29.0 15.7
  Prices Received 6.3 9.2 4.5 14.3 19.3 11.0 0.7
Expectations 6 Months Ahead 17.1 13.7 25.7 29.6 35.2 42.7 29.0
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