GlobalIndustrial sector activity continues to lose forward momentum. The Federal Reserve Bank of New York reported that the Empire State Factory Index of General Business Conditions declined to -1.43 this month from an unrevised 3.05 in April. It was the first negative reading since January. Any number above 50 indicates positive growth in factory sector activity. The latest fell short of Consensus expectations for 3.6. Based on these figures, Haver Analytics calculates an index that is compatible to the ISM series. The adjusted figure fell to 49.3 indicating slightly negative growth. Since inception in 2001, the business conditions index has had a 65% correlation with the quarterly change in real GDP.
Weakness in the overall index reflected broad-based component declines. A shortened workweek was the weakest series. The new orders, unfilled orders and inventory number fell sharply as well. Also down slightly was the employment figure. 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 reversed its earlier increase and fell to the lowest level since December. A lessened twenty eight percent of respondents reported paying higher prices while eight percent paid less, the most since July. 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 fell to 25.48, the lowest level since January. Lower readings for shipments, the number of employees, new orders, unfilled orders and prices paid 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 | May | Apr | Mar | May'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 49.3 | 50.2 | 51.2 | 55.7 | 51.8 | 51.8 | 52.9 |
| General Business Conditions (Diffusion Index, %) | -1.43 | 3.05 | 9.24 | 14.52 | 4.24 | 4.47 | 13.86 |
| New Orders | -1.17 | 2.20 | 8.18 | 8.99 | 1.38 | 4.04 | 9.96 |
| Shipments | -0.02 | 0.75 | 7.76 | 23.11 | 11.13 | 9.51 | 11.75 |
| Unfilled Orders | -6.82 | -3.41 | -2.15 | -4.82 | -8.83 | -5.29 | -6.58 |
| Delivery Time | -3.41 | -3.41 | -2.15 | 0.00 | -0.30 | -0.91 | -2.87 |
| Inventories | -7.95 | -4.55 | -5.38 | 4.82 | -2.91 | -1.80 | -1.48 |
| Number of Employees | 5.68 | 6.82 | 3.23 | 20.48 | 8.62 | 6.68 | 14.29 |
| Prices Paid | 20.45 | 28.41 | 25.81 | 37.35 | 24.71 | 40.66 | 29.63 |
U.S. PPI Continues Downward With Energy Prices;
Core Weakens Further The producer price index for finished goods fell 0.7% last month
(+0.7% y/y) and added to an unrevised 0.6% March shortfall. The decline
roughly matched expectations for a 0.6% drop. Prices excluding food &
energy ticked up an expected 0.1% (1.7% y/y). Energy prices led the
decline in overall prices with a 2.5% drop (-3.3% y/y), adding to the 3.4%
March decline. Gasoline prices fell 6.0% (-8.9% y/y) while home heating
oil prices were off 8.8% (-11.7% y/y). Residential gas prices surged
another 4.5% (10.4% y/y). Adding to the energy price declines was a 0.8%
drop (+2.3% y/y) in food prices, reversing a 0.8% March increase. Beef
costs dropped 3.8% (+0.9% y/y) but bakery product prices rose 0.3% (2.3%
y/y). Finished consumer goods prices dropped 1.0% (+0.6% y/y) but excluding
food & energy, prices ticked up 0.1% (2.3% y/y). Within the
components, women's clothing costs increased a substantial 2.3% y/y while
men's apparel prices rose 1.8% y/y. Household appliance prices edged up
just 0.1% y/y, furniture prices rose a steady 1.8% y/y but passenger car
prices slipped 0.2% y/y. Capital equipment prices edged up a steady 0.1%
(0.9% y/y). Intermediate goods prices fell 0.6% (-0.9% y/y) as energy costs
declined 2.1% (-4.7% y/y). Food prices were off 0.9% (+3.5% y/y) while core
intermediate prices fell 0.2% (-0.2% y/y. Crude goods prices edged
0.4% lower (+3.4% y/y) last month led by a 2.6% decline (+5.8% y/y) in
food prices. That was offset by a 3.7% rise (8.4% y/y) in energy prices.
Prices excluding food & energy fell 2.8% (-5.9% y/y). The PPI data are contained in Haver's USECON database with
further detail in PPI and PPIR. The expectations figures are
available in the AS1REPNA database.
by Tom
Moeller May 15, 2013
Producer Price Index
(%)
Apr
Mar
Feb
Apr Y/Y
2012
2011
2010
Finished Goods
-0.7
-0.6
0.7
0.7
1.9
6.0
4.2
Less Food & Energy
0.1
0.2
0.2
1.7
2.6
2.4
1.2
Foods
-0.8
0.8
-0.5
2.3
2.5
6.3
3.9
Energy
-2.5
-3.4
3.0
-3.3
-0.2
15.5
13.5
Intermediate Goods
-0.6
-0.9
1.3
-0.9
0.5
9.0
6.4
Less Food & Energy
-0.2
0.2
0.7
-0.2
0.3
6.2
4.3
Crude Goods
-0.4
-2.5
-0.3
3.4
-3.2
17.4
21.3
Less Food & Energy
-2.8
0.9
-1.7
-5.9
-5.2
18.5
32.5
