Global| Jun 17 2013Empire State Factory Index Recovers but Components Weaken
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions rose to 7.84 this month from an unrevised -1.43 in May. The latest figure exceeded Consensus expectations for 0.8. That, [...]
The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions rose to 7.84 this month from an unrevised -1.43 in May. The latest figure exceeded Consensus expectations for 0.8. That, however, was the end of the good news in the Bank's report. Declines in the component series were widespread. Moreover, based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 46.4 from 49.3. A declining level of activity is indicated by a figure below 50. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.
Deterioration in the overall index reflected broad-based component declines, as was the case in May. The unfilled orders, employee workweek and the shipments series showed the greatest m/m deterioration. The new orders, delivery time and inventory numbers fell sharply as well. At zero, the employment figure was its lowest level since January. 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 reading notched up slightly but remained near its lowest level since December. A lessened 24 percent of respondents reported paying higher prices while three percent paid less, the most since July. 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 fell slightly to 24.98 but that was the lowest level since January. Capital spending, the number of employees, shipments, new orders, unfilled orders and delivery times showed large declines.
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 | Jun | May | Apr | Jun'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 46.4 | 49.3 | 50.2 | 51.3 | 51.8 | 51.8 | 52.9 |
| General Business Conditions (Diffusion Index, %) | 7.84 | -1.43 | 3.05 | 4.15 | 4.24 | 4.47 | 13.86 |
| New Orders | -6.69 | -1.17 | 2.20 | 2.28 | 1.38 | 4.04 | 9.96 |
| Shipments | -11.77 | -0.02 | 0.75 | 6.34 | 11.13 | 9.51 | 11.75 |
| Unfilled Orders | -14.52 | -6.82 | -3.41 | -5.15 | -8.83 | -5.29 | -6.58 |
| Delivery Time | -6.45 | -3.41 | -3.41 | 0.00 | -0.30 | -0.91 | -2.87 |
| Inventories | -11.29 | -7.95 | -4.55 | -8.25 | -2.91 | -1.80 | -1.48 |
| Number of Employees | 0.00 | 5.68 | 6.82 | 12.37 | 8.62 | 6.68 | 14.29 |
| Prices Paid | 20.97 | 20.45 | 28.41 | 19.59 | 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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