Global| Jun 15 2015Empire State Factory Sector Index Eases
by:Tom Moeller
|in:Economy in Brief
Summary
The Empire State Factory Index of General Business Conditions slipped to -1.98 during June after modest improvement to 3.09 in May. The latest figure from the Federal Reserve Bank of New York was its lowest level since January 2013, [...]
The Empire State Factory Index of General Business Conditions slipped to -1.98 during June after modest improvement to 3.09 in May. The latest figure from the Federal Reserve Bank of New York was its lowest level since January 2013, remaining well under the 27.41 peak reached last September. The latest compared to expectations for improvement to 5.4 in the Action Economics Forecast Survey.
Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure eased m/m to 51 .9 and remained below the peak of 55.4 twelve months ago. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 68% correlation with the change in real GDP.
Movement in the component series remained mixed. Deterioration in new orders, shipments, and inventories was offset by improvement in unfilled orders and delivery times. Employment also recovered most of its May decline, though remaining well below the May 2014 peak of 20.88. During the last ten years, there has been a 72% correlation between the index level and the m/m change in factory sector payrolls. The average workweek index improved to its highest level in three months.
The prices paid index remained near its lowest level since July 2012. Fourteen percent of respondents reported paying higher prices, down from 79% in mid-2008. Five percent realized lower prices. During the last ten years, there has been a 70% 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 declined to 25.84 and roughly matched its three-year low. New orders, shipments, employment, inventories and capital spending each fell sharply. The index of expected prices paid declined modestly to the lowest level since the middle of 2009.
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 Consensus expectation figure can be found in Haver's AS1REPNA database.
| Empire State Manufacturing Survey | Jun | May | Apr | Jun'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 51.9 | 52.1 | 51.7 | 55.4 | 52.4 | 50.0 | 51.8 |
| General Business Conditions (Diffusion Index, %, SA) | -1.98 | 3.09 | -1.19 | 18.16 | 11.83 | 3.87 | 4.22 |
| New Orders | -2.12 | 3.85 | -6.00 | 16,63 | 7.89 | 1.16 | 1.46 |
| Shipments | 12.01 | 14.94 | 15.23 | 15.57 | 12.09 | 4.52 | 11.20 |
| Unfilled Orders | -4.81 | -11.46 | -11.70 | -1.08 | -9.03 | -8.74 | -8.83 |
| Delivery Time | -1.92 | -10.42 | -4.26 | 1.08 | -5.17 | -3.52 | -0.30 |
| Inventories | 1.92 | 7.29 | 2.13 | 9.68 | -1.80 | -5.73 | -2.91 |
| Number of Employees | 8.65 | 5.21 | 9.57 | 10.75 | 10.85 | 3.73 | 8.62 |
| Prices Paid | 9.62 | 9.38 | 19.15 | 7.20 | 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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