Global| Aug 17 2015Empire State Factory Sector Index Declines Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions deteriorated this month to its lowest level since the recession. The latest figure dropped to -14.92 from an unrevised 3.86 in July. It was the lowest level since April [...]
The Empire State Factory Index of General Business Conditions deteriorated this month to its lowest level since the recession. The latest figure dropped to -14.92 from an unrevised 3.86 in July. It was the lowest level since April 2009. The latest disappointed expectations for 4.4 in the Action Economics Forecast Survey. The figures are reported by the Federal Reserve of New York.
Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure fell sharply to 45.0, also a 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.
Declines in the component series were broad-based this month, but most pronounced in inventories, new orders and shipments. Unfilled orders, delivery times and the average workweek also posted negative readings. The number of employees remained positive, but it was at the lowest level since December 2013. During the last ten years there has been a 72% correlation between the employment series and the m/m change in factory sector payrolls.
The prices paid index eased to 7.27, the lowest point since May 2009. Eighteen percent of respondents reported higher prices but a sharply increased 11 percent paid less, the most since July 2009. Prices received also deteriorated modestly.
Despite the weakening of current business conditions, a sharply increased 42.7% of respondents expected improvement, near the high end of this year's range. Each of the component series exhibited m/m gain except prices paid 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 dates back to 2001. The Action Economics figure can be found in Haver's AS1REPNA database.
| Empire State Manufacturing Survey | Aug | Jul | Jun | Aug'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 45.0 | 49.9 | 51.9 | 52.9 | 52.4 | 50.0 | 51.8 |
| General Business Conditions (Diffusion Index, %, SA) | -14.92 | 3.86 | -1.98 | 15.10 | 11.83 | 3.87 | 4.22 |
| New Orders | -15.70 | -3.50 | -2.12 | 14.24 | 7.89 | 1.16 | 1.46 |
| Shipments | -13.79 | 7.88 | 12.01 | 21.93 | 12.09 | 4.52 | 11.20 |
| Unfilled Orders | -4.55 | -7.45 | -4.81 | -7.95 | -9.03 | -8.74 | -8.83 |
| Delivery Time | -4.55 | 0.00 | -1.92 | -5.68 | -5.17 | -3.52 | -0.30 |
| Inventories | -17.27 | -8.51 | 1.92 | -14.77 | -1.80 | -5.73 | -2.91 |
| Number of Employees | 1.82 | 3.19 | 8.65 | 13.64 | 10.85 | 3.73 | 8.62 |
| Prices Paid | 7.27 | 7.45 | 9.62 | 27.27 | 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.
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