Global| Feb 15 2011Empire State Factory Index Increases Again
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 improved further to 15.43, the highest since June of last year. The figure roughly equaled Consensus expectations for [...]
The Federal Reserve Bank of New York reported that its Empire State Factory Index of General Business Conditions improved further to 15.43, the highest since June of last year. The figure roughly equaled Consensus expectations for 15.0. Nevertheless, the index remained below last year's high of 29.71. These figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting the indicator lower from those reporting the indicator higher. Thus, they have a good correlation with growth in the series covered. Separately, since inception in 2001, the business conditions index has a 78% correlation with the quarterly change in real GDP.
Improvement in the subseries was notable for inventories, delivery times (shorter) and the average employee workweek The new orders series slipped while the employment reading also fell to 3.61 from 8.42. (During the last ten years there has been an 82% correlation between the jobs index and the m/m change in factory sector payrolls.) The prices paid index rose sharply to 45.78, its highest since August 2008. Since inception, there has been a 68% correlation between the index of prices paid and the monthly change in the core intermediate materials PPI.The Empire State index of expected business conditions in six months fell to 49.40 and reversed its last three months' improvement. Deterioration was notable for new orders, shipments and unfilled orders. A separate series of expected capital spending slipped from its recent high while the technology index also slipped.
The Empire State data is available in Haver's SURVEYS database. The figures are diffusion indexes. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components. The series dates back only to 2001.
| Empire State Manufacturing Survey | Feb | Jan | Dec | Feb'10 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (diffusion index, %) | 15.43 | 11.92 | 9.89 | 24.86 | 13.80 | -2.81 | -9.96 |
| New Orders | 11.80 | 12.39 | 2.03 | 13.42 | 9.93 | -2.51 | -6.23 |
| Inventories | 9.64 | 4.21 | -15.91 | -18.42 | 0.00 | -22.89 | -7.87 |
| Employment | 3.61 | 8.42 | -3.41 | 5.56 | 11.78 | -17.28 | -5.36 |
| Prices Paid | 45.78 | 35.79 | 28.41 | 31.94 | 29.63 | 1.33 | 46.99 |
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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