Global| Jan 15 2016Empire State Factory Sector Activity Plummets to Lowest Point Since the Recession
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions declined sharply during January to -19.37, the lowest level since March 2009. Expectations had been for -4.0 in the Action Economics Forecast Survey. The data are reported [...]
The Empire State Factory Index of General Business Conditions declined sharply during January to -19.37, the lowest level since March 2009. Expectations had been for -4.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve 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 compatible to the ISM series. The adjusted figure fell to 45.6, the lowest level since June 2009. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 62% correlation with the change in real GDP.
The decline in the overall index was due to sharply lower readings for new orders and shipments. New orders fell to -23.54 and shipments declined to -14.39, both the lowest readings since March 2009. The delivery times index also declined to -13.00, indicating the fastest delivery speeds since December 2014. Modest improvement was evident in the other components. The employment index rose, but still was negative for the fifth consecutive month. Unfilled orders and inventories increased, but remained negative.
The prices paid index surged to its highest level since April. Twenty-two percent of respondents indicated an increase in prices while 5 percent paid less.
The expectations index for general business conditions also declined sharply to the lowest reading since the recession. Most component series fell sharply, notably new orders, shipments and employment.
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 | Jan | Dec | Nov | Jan'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 45.6 | 47.8 | 47.2 | 52.7 | 49.9 | 53.4 | 50.7 |
| General Business Conditions (Diffusion Index, %, SA) | -19.37 | -6.21 | -10.06 | 9.69 | -2.34 | 11.89 | 3.88 |
| New Orders | -23.54 | -6.18 | -11.75 | 5.53 | -5.62 | 7.91 | 1.15 |
| Shipments | -14.39 | 4.62 | -3.03 | 10.17 | 3.97 | 12.09 | 4.55 |
| Unfilled Orders | -11.00 | -16.16 | -18.18 | -23.96 | -10.52 | -9.03 | -8.74 |
| Delivery Time | -13.00 | -8.08 | -10.91 | -14.58 | -5.32 | -5.17 | -3.52 |
| Inventories | -6.00 | -12.12 | -17.27 | -11.46 | -7.06 | -1.80 | -5.73 |
| Number of Employees | -13.00 | -16.16 | -7.27 | 8.33 | 2.72 | 10.85 | 3.73 |
| Prices Paid | 16.00 | 4.04 | 4.55 | 10.42 | 8.84 | 20.90 | 21.53 |
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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