Global| Mar 18 2013Empire State Factory Index Remains Positive
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of New York reported that the Empire State Factory Index of General Business Conditions held above break-even in March, for the second consecutive month. The latest reading of 9.24 dipped from 10.04 in [...]
The Federal Reserve Bank of New York reported that the Empire State Factory Index of General Business Conditions held above break-even in March, for the second consecutive month. The latest reading of 9.24 dipped from 10.04 in February but the two positive figures followed six consecutive readings below zero. The latest roughly matched Consensus expectations. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 51.2 but also continued to indicate positive growth. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.
All of the index components deteriorated this month except the average workweek. Nevertheless, most of the other series suggest positive activity, notably the new orders, shipments and employment indexes. The employment series slipped but remained near its highest level in since September. During the last ten years there has been a 76% correlation between the jobs index and the m/m change in factory sector payrolls.
The prices paid reading slipped to 25.81 but remained near its highest level since May. Twenty nine percent of respondents reported paying higher prices while three percent 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 further to 36.43, its highest level since April. Virtually all of the component index readings improved, notably shipments, prices paid, number of employees and technology spending..
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 | Mar | Feb | Jan | Mar'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 51.2 | 53.7 | 47.5 | 54.4 | 51.8 | 51.8 | 52.9 |
| General Business Conditions (Diffusion Index, %) | 9.24 | 10.04 | -7.78 | 18.00 | 4.24 | 4.47 | 13.86 |
| New Orders | 8.18 | 13.31 | -7.18 | 6.55 | 1.38 | 4.04 | 9.96 |
| Shipments | 7.76 | 13.08 | -3.08 | 15.97 | 11.13 | 9.51 | 11.75 |
| Unfilled Orders | -2.15 | -2.02 | -7.53 | -1.23 | -8.83 | -5.29 | -6.58 |
| Delivery Time | -2.15 | 2.02 | -2.15 | 7.41 | -0.30 | -0.91 | -2.87 |
| Inventories | -5.38 | 0.00 | -8.60 | 0.00 | -2.91 | -1.80 | -1.48 |
| Number of Employees | 3.23 | 8.08 | -4.30 | 13.58 | 8.62 | 6.68 | 14.29 |
| Prices Paid | 25.81 | 26.26 | 22.58 | 50.62 | 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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