Global| May 16 2014Empire State Factory Sector Index Improves to Four-Year High
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions for May jumped to 19.01 from 1.29 during April. The latest was the highest level since May 2011 and beat expectations [...]
The Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions for May jumped to 19.01 from 1.29 during April. The latest was the highest level since May 2011 and beat expectations for 5.3, according to 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 also jumped this month to 55.0 from 49.6, the highest level in two years. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 67% correlation with the quarterly change in real GDP.
Improvement in the overall May index was widespread: new orders, shipments, unfilled orders, delivery times and inventories each rose. The employment index reached its highest level in three years. During the last ten years there has been a 75% correlation between the jobs index and the m/m change in factory sector payrolls.
The prices paid index fell to its lowest level since December. Twenty three percent of respondents reported paying higher prices while three percent paid less. 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 improved sharply to 43.96, the highest level since early 2012. The index of prices paid in twelve months fell, however, to its lowest level since July of last year.
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 date back only to 2001. The Consensus expectation figure is in Haver's AS1REPNA database.
| Empire State Manufacturing Survey | May | Apr | Mar | May'13 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (ISM Adjusted) | 55.0 | 49.6 | 51.7 | 49.3 | 50.0 | 51.8 | 51.8 |
| General Business Conditions (Diffusion Index, %) | 19.01 | 1.29 | 5.61 | 0.27 | 3.82 | 4.29 | 4.48 |
| New Orders | 10.44 | -2.77 | 3.13 | -0.67 | 1.13 | 1.47 | 4.04 |
| Shipments | 17.44 | 3.15 | 3.97 | -0.36 | 4.49 | 11.22 | 9.47 |
| Unfilled Orders | -1.10 | -13.27 | -16.47 | -6.82 | -8.74 | -8.83 | -5.29 |
| Delivery Time | -1.10 | -9.18 | -3.53 | -3.41 | -3.52 | -0.30 | -0.91 |
| Inventories | 2.20 | -3.06 | 7.06 | -7.95 | -5.73 | -2.91 | -1.80 |
| Number of Employees | 20.88 | 8.16 | 5.88 | 5.68 | 3.73 | 8.62 | 6.68 |
| Prices Paid | 19.78 | 22.45 | 21.18 | 20.45 | 21.53 | 24.71 | 40.66 |
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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