Global| Dec 17 2012Empire State Factory Index Remains Negative
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions was negative for the fifth consecutive month. The December reading of -8.10 was nearly the lowest level of the economic recovery. Consensus expectations had been for m/m [...]
The Empire State Factory Index of General Business Conditions was negative for the fifth consecutive month. The December reading of -8.10 was nearly the lowest level of the economic recovery. Consensus expectations had been for m/m improvement to -1.0. The Fed indicated that revenues in October and November were 7% and 5%, respectively, lower than they would have been due to superstorm Sandy. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure declined to 48.1, just above its lowest since September of last year. Since inception in 2001, the business conditions index has had a 64% correlation with the quarterly change in real GDP.
The shipments figure remained positive, as it has mostly been for more than a year. However, the other index levels were broadly negative. Employment was negative for the third consecutive month. During the last ten years there has been a 76% correlation between the jobs index and the m/m change in factory sector payrolls. New orders were negative for the fifth month in the last six.
The reading for prices paid improved slightly m/m to 6.13 but remained sharply lower than its highs earlier this year. Twenty percent of respondents indicated paying higher prices while 4% paid less. During the last ten years there has been a 64% 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 improved to 18.66. However, it still was near its lowest in a year. Component index readings were broadly higher except inventories & technology spending. The shipments and new orders series soared.
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 | Dec | Nov | Oct | Dec'11 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 48.1 | 49.0 | 47.7 | 52.5 | 51.8 | 51.7 | 52.9 |
| General Business Conditions (Diffusion Index, %) | -8.10 | -5.22 | -6.16 | 8.19 | 4.23 | 4.33 | 13.85 |
| New Orders | -3.70 | 3.08 | -8.97 | 5.99 | 1.29 | 4.00 | 9.88 |
| Shipments | 8.83 | 14.59 | -6.40 | 20.06 | 11.02 | 9.39 | 11.61 |
| Unfilled Orders | -6.45 | -11.24 | -18.28 | -15.12 | -8.83 | -5.29 | -6.58 |
| Delivery Time | -2.15 | -1.12 | -4.30 | 0.00 | -0.30 | -0.91 | -2.87 |
| Inventories | -11.83 | -12.36 | -2.15 | -3.49 | -2.91 | -1.80 | -1.48 |
| Number of Employees | -9.68 | -14.61 | -1.08 | 2.33 | 8.62 | 6.68 | 14.29 |
| Prices Paid | 16.13 | 14.61 | 17.20 | 2.42 | 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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