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Economy in Brief

Empire State Factory Sector Activity Decreases For Second Consecutive Month
by Tom Moeller  September 15, 2015

The Empire State Factory Index of General Business Conditions remained negative during September, nearly the weakest reading since the recession. The latest figure of -14.67 compared to an unrevised -14.92 in August. These diffusion indexes were the lowest since April 2009. The latest disappointed expectations for -3.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve of New York and reflect 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 eased to 44.9, 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.

Each of the component series were negative this month. The employment figure entered negative territory for the first time since January 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. New orders and shipments also were close to the lowest levels since 2009, while vendor delivery speeds quickened to the fastest pace this year.

The prices paid index eased to 4.12, the lowest point since June 2009. Eighteen percent of respondents reported higher prices but a sharply increased 13 percent paid less, the most since June 2009. Prices received fell into negative territory, also for the first time since 2009.

Expectations for business conditions also deteriorated to the lowest positive level since January 2013. A sharply reduced 39.6% of respondents expected improvement. Each of the component series deteriorated m/m.

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 Sep Aug Jul Sep'14 2014 2013 2012
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 44.8 45.0 49.9 53.0 52.4 50.0 51.8
General Business Conditions (Diffusion Index, %, SA) -14.67 -14.92 3.86 27.41 11.83 3.87 4.22
 New Orders -12.91 -15.70 -3.50 16.35 7.89 1.16 1.46
 Shipments -7.98 -13.79 7.88 23.24 12.09 4.52 11.20
 Unfilled Orders -8.25 -4.55 -7.45 -10.87 -9.03 -8.74 -8.83
 Delivery Time -6.19 -4.55 0.00 -5.68 -5.43 -3.52 -0.30
 Inventories -18.56 -17.27 -8.51 -7.61 -1.80 -5.73 -2.91
 Number of Employees -6.19 1.82 3.19 3.26 10.85 3.73 8.62
 Prices Paid 4.12 7.27 7.45 23.91 20.90 21.53 24.71
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