Global| Jul 15 2016Empire State Factory Sector Activity Index Deteriorates
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions declined during July to 0.55 and reversed much of its June improvement. Expectations had been for 5.0 in the Action Economics Forecast Survey. The data are reported by the [...]
The Empire State Factory Index of General Business Conditions declined during July to 0.55 and reversed much of its June improvement. Expectations had been for 5.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve Bank of New York and reflect business conditions in New York, northern New Jersey and southern Connecticut.
Based on these figures, Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The adjusted figure declined to 48.9 from 50.3. Since inception in 2001, the business conditions index has had a 64% correlation with the change in real GDP.
A weaker new orders reading accounted for much of the decline in the overall index as it fell to -1.82 from 10.90. Shipments also declined to 0.70 from 9.32. Unfilled orders fell to -12.09 from -10.20 and employment moved lower to -4.40 from 0.00. During the last ten years there has been a 68% correlation between the index level and the m/m change in factory sector payrolls. The workweek figure also deteriorated slightly. To the upside, the inventory index showed a lesser rate of decumulation and delivery times shortened.
The prices paid index increased to 18.68, the highest level since April of last year. It remained down, however, from the 2011 high of 69.89. Twenty-three percent of respondents paid higher prices while four percent paid less. The index of prices received improved slightly.
The index of expectations for business conditions in six months declined to 29.24 but remained up sharply versus the expansion low of 9.51 in January. Changes in the component series were modest m/m, except that employment declined sharply, but technology spending improved significantly.
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 dates back to 2001. The Action Economics figure can be found in Haver's AS1REPNA database.
| Empire State Manufacturing Survey | Jul | Jun | May | Jul'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 48.9 | 50.3 | 48.1 | 49.5 | 48.9 | 52.4 | 50.0 |
| General Business Conditions (Diffusion Index, %, SA) | 0.55 | 6.01 | -9.02 | 0.94 | -2.34 | 11.89 | 3.88 |
| New Orders | -1.82 | 10.90 | -5.54 | -5.18 | -5.62 | 7.91 | 1.15 |
| Shipments | 0.70 | 9.32 | -1.94 | 5.22 | 3.97 | 12.09 | 4.55 |
| Unfilled Orders | -12.09 | -10.20 | -6.25 | -7.45 | -10.52 | -9.03 | -8.74 |
| Delivery Time | 3.30 | -2.04 | -6.25 | 0.00 | -5.32 | -5.17 | -3.52 |
| Inventories | -8.79 | -15.31 | -7.29 | -8.51 | -7.06 | -1.80 | -5.73 |
| Number of Employees | -4.40 | 0.00 | 2.08 | 3.19 | 2.72 | 10.85 | 3.73 |
| Prices Paid | 18.68 | 18.37 | 16.67 | 7.45 | 8.84 | 20.90 | 21.53 |
| Expectations 6 Months Ahead | 29.24 | 34.84 | 28.48 | 27.87 | 30.38 | 40.22 | 33.25 |
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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