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Economy in Brief

U.S. Empire State Manufacturing Index Rebounds in April
by Winnie Tapasanun  April 15, 2022

• Business activity improves noticeably in New York State, w/ the General Business Conditions Index up 36.4 points to 24.6.

• Inflation pressures continue w/ prices paid up 12.6 points to 86.4, a record high.

• Future optimism wanes w/ the Future Business Conditions Index down 21.4 points to 15.2.

The Empire State Manufacturing Index of General Business Conditions jumped to 24.6 in April from -11.8 in March and 3.1 in February, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 1.5 had been expected for April in the Action Economics Forecast Survey. The April reading was the highest since December, slightly down from 26.3 in April 2021. An increased 39.6% of respondents reported that conditions had improved in April compared to 23.6% in March, while a lessened 15.0% reported that conditions had worsened compared to 35.4%. The latest survey was conducted between April 4 and April 11.

Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series. The index was at 60.2 in April, meaningfully up from 55.0 in March but slightly down from 60.5 in April 2021 and a 63.4 high in July 2021, indicating that activity remained robust in April. A reading above 50 signals growth. In contrast to the ISM index, the headline Empire Index reflects the answer to a single question, not calculated from its components.

The new orders index rebounded to 25.1 in April, a four-month high, from -11.2 in March. An increased 43.3% of respondents reported higher orders in April, while 18.2% reported lower orders. The shipments index recovered to 34.5, the highest reading since July 2021, from -7.4. An improved 45.4% of respondents reported higher shipments, while 10.9% reported lower shipments.

The unfilled orders index increased to 17.3 in April, the highest level since December, from 13.1 in March. The delivery times index fell to 21.8 from 32.7, with a lessened 31.8% of respondents reporting higher delivery times and 10.0% of respondents reporting lower delivery times. The inventories index fell to 13.6 in April from March's high of 21.5 (the highest level since September 2001).

The number of employees index dropped to 7.3 in April from 14.5 in March, registering the lowest level since October 2020. A lessened 15.2% of respondents reported increases in employment in April, while 7.9% reported lower employment. The average workweek rebounded to 10.0 from March's low of 3.5 (the lowest since August 2020).

Inflation pressures continued this month. The prices paid index advanced to a record 86.4 in April from 73.8 in March and the prices received index declined to a still-elevated 49.1 from March's record high of 56.1, indicating ongoing substantial rises in both input prices and selling prices. An increased 86.4% of respondents reported higher prices paid in April, while 0% reported lower prices paid. A lessened 49.1% of respondents reported higher prices received in April, while 0% reported lower prices received.

The indexes of expected conditions in six months fell markedly. The index for future business conditions dropped to 15.2 in April, the lowest level since April 2020, from 36.6 in March. Expectations for new orders, shipments, unfilled orders, delivery times, inventories, prices paid, prices received, and employment, all fell this month. Expectations for capital spending eased slightly, still remaining firm. Expectations for technology spending improved modestly.

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 the percent 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 Apr Mar Feb Apr'21 2021 2020 2019
General Business Conditions (Diffusion Index, %, SA) 24.6 -11.8 3.1 26.3 23.3 -5.9 4.8
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 60.2 55.0 56.1 60.5 58.9 49.3 51.8
  New Orders 25.1 -11.2 1.4 26.9 21.7 -4.3 3.3
  Shipments 34.5 -7.4 2.9 25.0 20.1 -0.2 10.5
  Unfilled Orders 17.3 13.1 14.4 21.2 12.5 -7.7 -6.0
  Delivery Time 21.8 32.7 21.6 28.1 23.8 2.7 -0.1
  Inventories 13.6 21.5 11.7 11.6 7.8 -3.9 -0.9
  Number of Employees 7.3 14.5 23.1 13.9 15.9 -1.2 5.4
  Average Employee Workweek 10.0 3.5 10.9 12.7 14.2 -6.9 2.3
  Prices Paid 86.4 73.8 76.6 74.7 73.0 21.5 26.3
  Prices Received 49.1 56.1 54.1 34.9 36.7 4.8 10.3
Expectations 6 Months Ahead 15.2 36.6 28.2 39.8 40.6 29.7 23.9
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