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Economy in Brief

U.S. Empire State Manufacturing Activity Strengthens in September
by Tom Moeller  September 15, 2021

• Index increase reverses part of August decline.

• New orders, shipments and employment improve sharply.

• Pricing power eases again, but remains strong.

The Empire State Manufacturing Index of General Business Conditions increased 16 points in September to 34.3 and recovered much of August's decline to 18.3. The index stood at a record 43.0 in July. A reading of 16.8 had been expected in the Action Economics Forecast Survey. A sharply improved 45.9% of respondents reported improved business conditions, while a lessened 11.6% reported that conditions had worsened. Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series. The latest reading jumped to 62.9 after falling to 56.7 from the record high of 63.4 in July. A reading above 50 signifies positive growth.

Movement amongst the component series was positive. The new orders measure surged to 33.7, the highest level since May 2004 and recouped its August fall. The shipments reading rose to 26.9, recovering much of its August decline. The delivery time index rose to 36.5, indicating a record slow pace of product delivery speed. The unfilled orders series rebounded to a near-record 20.0 after falling moderately in August. Inventories rose to 11.3 after falling to 6.2 in August from 16.2 in July.

The number of employees index rose to 20.5 and recovered its August decline. It remained near the highest level since May 2004. An improved 26.1% of respondents reported more hiring while a greatly lessened 5.5% reported less. The average workweek reading surged to a near-record 24.3.

The prices paid index fell to 75.7 from 76.1 in August and remained below the record 83.5 in May. Seventy-seven percent of respondents indicated higher prices while only 0.9% paid less. The prices received measure surged to a record high of 47.8.

The index of business conditions in six months rose to 48.4 this month, its highest level since June 2020. Expectations for new orders, shipments and employment rose. Expectations for prices paid fell.

The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in the manufacturing sector in New York, northern New Jersey and southern Connecticut. The headline measure is constructed from the answer to a single question on business conditions. 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 Sep Aug Jul Sep'20 2020 2019 2018
General Business Conditions (Diffusion Index, %, SA) 34.3 18.3 43.0 17.0 -5.9 4.8 19.7
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 62.9 56.7 63.4 52.5 49.3 51.8 56.4
  New Orders 33.7 14.8 33.2 7.1 -4.3 3.3 16.4
  Shipments 26.9 4.4 43.8 14.1 -0.2 10.5 20.3
  Unfilled Orders 20.9 15.0 12.1 -9.4 -7.7 -6.0 3.5
  Delivery Time 36.5 28.3 20.2 5.0 2.7 -0.1 9.1
  Inventories 11.3 6.2 16.2 -3.6 -3.9 -0.9 5.9
  Number of Employees 20.5 12.8 20.6 2.6 -1.2 5.4 12.3
  Average Employee Workweek 24.3 8.9 14.0 6.7 -6.9 2.3 7.8
  Prices Paid 75.7 76.1 76.8 25.2 21.5 26.3 45.8
  Prices Received 47.8 46.0 39.4 6.5 4.8 10.3 19.3
Expectations 6 Months Ahead 48.4 46.5 39.5 40.3 29.7 23.9 35.2
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