Global| Nov 16 2015Empire State Factory Sector Activity Remains Negative
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions remained negative for the fourth consecutive month during November. The reading of -10.74 compared to an unrevised -11.36 in October. These diffusion indexes were nearly [...]
The Empire State Factory Index of General Business Conditions remained negative for the fourth consecutive month during November. The reading of -10.74 compared to an unrevised -11.36 in October. These diffusion indexes were nearly the lowest since April 2009. The latest figure disappointed expectations for -6.0 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 improved slightly to 47.0, but also was near the six-year low. 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 component series showed mixed results this month. The employment figure remained in negative territory for the third month, near its lowest point since December 2012. During the last ten years, there has been a 72% correlation between the employment series and the m/m change in factory sector payrolls. New orders neared the lowest level since 2009. Shipments improved but still were at a three-month low. Vendor delivery speeds remained at the fastest pace since December 2014 and unfilled orders declined.
The prices paid index improved slightly to the highest point in three months. A sharply reduced 11% of respondents reported higher prices but a sharply reduced 6% reported them lower. Prices received remained in negative territory.
Expectations for business conditions fell sharply to the lowest level since November 2012. New orders and shipments deteriorated sharply but unfilled orders and inventories surged. Employment also gained to the highest level in six months but prices paid remained weak.
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.
The Transmission of Exchange Rate Changes to Output and Inflation is the title of last week's speech by Fed Vice Chairman Stanley Fischer and it can be found here.
| Empire State Manufacturing Survey | Nov | Oct | Sep | Nov'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 47.0 | 46.3 | 46.1 | 53.8 | 53.4 | 50.7 | 51.9 |
| General Business Conditions (Diffusion Index, %, SA) | -10.74 | -11.36 | -14.67 | 10.33 | 11.83 | 3.87 | 4.22 |
| New Orders | -11.82 | -18.91 | -12.91 | 9.12 | 7.89 | 1.16 | 1.46 |
| Shipments | -4.10 | -13.61 | -7.98 | 10.61 | 12.09 | 4.52 | 11.20 |
| Unfilled Orders | -18.18 | -15.09 | -8.25 | -7.45 | -9.03 | -8.74 | -8.83 |
| Delivery Time | -10.91 | -11.32 | -6.19 | -9.57 | -5.43 | -3.52 | -0.30 |
| Inventories | -17.27 | -7.55 | -18.56 | 0.00 | -1.80 | -5.73 | -2.91 |
| Number of Employees | -7.27 | -8.49 | -6.19 | 8.51 | 10.85 | 3.73 | 8.62 |
| Prices Paid | 4.55 | 0.94 | 4.12 | 10.64 | 20.90 | 21.53 | 24.71 |
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.
