Global| Sep 16 2013Empire State Factory Index Continues To Show Improvement
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions for September slipped to 6.29 from an unrevised 8.24 in August. The latest figure fell short of expectations for 9.0 [...]
The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions for September slipped to 6.29 from an unrevised 8.24 in August. The latest figure fell short of expectations for 9.0 according to the Action Economics Forecast Survey. Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure rose to 52.4, its highest level since February. An improving level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 63% correlation with the quarterly change in real GDP.
Improvement in the overall index was led by a sharply higher shipments figure which stood at its highest level since May of last year. The inventories series also jumped and registered its first positive reading in just over twelve months. The new orders figure rose slightly. Offsetting these gains where declines in the delivery times, unfilled orders and employment series. Nevertheless the employment reading remained at its highest level since February. During the last ten years there has been a 73% correlation between the jobs index and the m/m change in factory sector payrolls.
The prices paid index improved modestly to its highest level since April. A slightly higher 24 percent of respondents reported paying higher prices while a fairly stable 2 percent paid less. During the last ten years there has been a 66% correlation between the index and the 3-month change in the intermediate goods PPI.
Looking ahead, the Empire State index of expected business conditions in six months jumped to 40.64, its highest level since April of last year. Improved inventories, new orders and shipments series led the gain but employment fell as did capital expenditures.
The Empire State figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. The data is available in Haver's SURVEYS database. The ISM-adjusted headline index is calculated by Haver Analytics. The series date back only to 2001. The Consensus expectation figure is in Haver's AS1REPNA database.
| Empire State Manufacturing Survey | Sep | Aug | Jul | Sep'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 52.4 | 50.8 | 51.3 | 50.3 | 51.8 | 51.8 | 52.9 |
| General Business Conditions (Diffusion Index, %) | 6.29 | 8.24 | 9.46 | -7.54 | 4.24 | 4.47 | 13.86 |
| New Orders | 2.35 | 0.27 | 3.77 | -10.60 | 1.38 | 4.04 | 9.96 |
| Shipments | 16.43 | 1.47 | 8.96 | 7.30 | 11.13 | 9.51 | 11.75 |
| Unfilled Orders | -6.45 | -6.02 | -8.70 | -14.89 | -8.83 | -5.29 | -6.58 |
| Delivery Time | -4.30 | -1.20 | 3.26 | 2.13 | -0.30 | -0.91 | -2.87 |
| Inventories | 2.15 | -3.61 | -6.52 | 0.00 | -2.91 | -1.80 | -1.48 |
| Number of Employees | 7.53 | 10.84 | 3.26 | 4.26 | 8.62 | 6.68 | 14.29 |
| Prices Paid | 21.51 | 20.48 | 17.39 | 19.15 | 24.71 | 40.66 | 29.63 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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