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Economy in Brief

Empire State Manufacturing Activity Index Moves Modestly Higher; Prices Strengthen
by Tom Moeller  January 15, 2020

The Empire State Manufacturing Index of General Business Conditions rose slightly to 4.8 in January from 3.3 in December. The index has been fairly steady since June. A reading of 3.3 had been expected by the Action Economics Forecast Survey. Twenty-eight percent of respondents reported that conditions had improved in January while 23% reported a worsening. Earlier figures were revised. The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York state, northern New Jersey and southern Connecticut.

Haver Analytics calculates a seasonally adjusted index that is comparable to the headline ISM index. The ISM-adjusted index was little changed at 52.1 in January and above the low of 48.9 in June of last year. 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 and the quarter-to-quarter percent change in real GDP.

The component series in the Empire State survey demonstrated mixed performance versus December. The shipments and inventories indexes declined while new orders, unfilled orders and delivery times improved.

Labor market conditions in January also were mixed. Employment continued to expand but at a slightly slower rate. Eighteen percent of respondents indicated improved hiring while nine percent reported deterioration. The average workweek reading has been moving sideways.

The prices paid index more than doubled to 31.5 in January, its highest level since March of last year. A greatly increased 34% of respondents reported paying higher prices while a lessened two percent paid less. The prices received index also increased sharply.

The series measuring expectations for business conditions in six months declined to 23.6 in January and was little changed y/y. Expected new orders, shipments and inventories rose but hiring intentions held steady. The capital expenditures index remained greatly improved.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percentage of respondents reporting declines from the percentage reporting gains. Their values range from -100 to +100. 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 Jan Dec Nov Jan'19 2019 2018 2017
General Business Conditions (Diffusion Index, %, SA) 4.8 3.3 2.5 4.8 4.8 19.7 16.1
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 52.1 51.8 50.7 52.4 51.8 56.4 54.6
  New Orders 6.6 1.7 3.1 6.3 3.3 16.4 14.4
  Shipments 8.6 9.5 7.3 17.9 10.5 20.3 15.8
  Unfilled Orders -2.7 -13.8 -8.2 -7.6 -6.0 3.5 1.9
  Delivery Time -2.7 -5.8 -5.5 -2.1 -0.1 9.1 6.1
  Inventories -0.7 2.2 -6.2 7.6 -0.9 5.9 1.5
  Number of Employees 9.0 10.4 8.5 9.3 5.4 12.3 8.0
  Average Employee Workweek 1.3 0.7 1.9 6.2 2.3 7.8 4.6
  Prices Paid 31.5 15.2 20.5 35.9 26.3 45.8 29.0
  Prices Received 14.4 4.3 6.2 13.1 10.3 19.3 11.0
Expectations 6 Months Ahead 23.6 26.1 19.8 21.2 23.9 35.2 42.6
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