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Economy in Brief

Empire State Manufacturing Expansion Slows in November
by Tom Moeller  November 16, 2020

• Component declines are broad-based.

• Pricing power improves.

The Empire State General Business Conditions Index edged lower to 6.3 this month after easing to 10.5 in October. Nevertheless, it was the fifth consecutive positive reading. A lessened 30.8% reported increased business conditions in November, down from 35.8% in October, while 24.4% reported a decline versus 25.3% in October. The Business Conditions measure is a diffusion index, constructed by subtracting the percentage decrease from the percentage increase, The total is constructed from the answer to a single question on business conditions. The Action Economics Forecast Survey expected a decline to 13.8.

Haver Analytics calculates an ISM-Adjusted Index which is similar to the ISM purchasing managers' index. This figure slipped to 51.2 in November. It was the fifth month in the last six above 50, which indicates expansion in business activity.

Most of the underlying series weakened this month. The new orders index eased to 3.7, its lowest point in four months. The shipments measure similarly fell to 6.3, its lowest level since June. At -11.9, the unfilled orders measure remained negative as it has since April. The delivery times index fell to the lowest level in six months, indicating quicker delivery speeds. Inventories continued to fall as they have since April.

The labor market readings were mixed in December. Working higher, the employment measure rose to 9.4, its best reading since December. An increased 20.2% of respondents reported higher payrolls while a greatly lessened 10.8% indicated a decline. Despite this improvement, the employee workweek measure fell to 4.8, its weakest reading in three months.

The prices paid index improved to 29.1 in November, its highest figure since January and up from May's low of 4.1. The prices received index posted a fourth consecutive positive reading, rising to 11.3 from 5.3 in October.

Optimism about the future remained positive. The index of general business conditions expected in six months improved to 33.9 from 32.8. Expectations for inventories, unfilled orders and delivery times rose while expected orders and shipments fell.

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 July 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Nov Oct Sep Nov'19 2019 2018 2017
General Business Conditions (Diffusion Index, %, SA) 6.3 10.5 17.0 2.5 4.8 19.7 16.1i
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 51.2 52.5 52.5 50.7 51.8 56.4 54.6
  New Orders 3.7 12.3 7.1 3.1 3.3 16.4 14.4
  Shipments 6.3 17.8 14.1 7.3 10.5 20.3 15.8
  Unfilled Orders -11.9 -6.6 -9.4 -8.2 -6.0 3.5 1.9
  Delivery Time 0.7 2.0 5.0 -5.5 -0.1 9.1 6.1
  Inventories -8.6 -14.6 -3.6 -6.2 -0.9 5.9 1.5
  Number of Employees 9.4 7.2 2.6 8.5 5.4 12.3 8.0
  Average Employee Workweek 4.8 16.1 6.7  1.9 2.3 7.8 4.6
  Prices Paid 29.1 27.8 25.2 20.5 26.3 45.8 29.0
  Prices Received 11.3 5.3 6.5 6.2 10.3 19.3 11.0
Expectations 6 Months Ahead 33.9 32.8 40.3 19.8 23.9 35.2 42.6
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