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Economy in Brief

Empire State Factory Sector Index Deteriorates; Prices Improve
by Tom Moeller  October 17, 2016

The Empire State Factory Index of General Business Conditions for October remained below zero for the third straight month as it fell to -6.80 from -2.00 in September. Earlier figures were revised slightly. Expectations had been for 1.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve Bank 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 comparable to the ISM series. The adjusted figure improved to 46.5 from 45.0. Since inception in 2001, the business conditions index has had a 64% correlation with the change in real GDP.

A weaker delivery times reading was accompanied by improvement in other component series. The employment series made up weakness in the prior three months. During the last ten years, there has been a 68% correlation between the index level and the m/m change in factory sector payrolls. The workweek component improved slightly.

The prices paid index improved to 22.60, the highest level since September 2014. Twenty-five percent of respondents paid higher prices while two percent paid less. The index of prices also rose to the highest point since July of last year.

The index of expectations for business conditions in six months strengthened to the highest level since April of last year due to widespread component increases.

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 Oct Sep Aug Oct'15 2015 2014 2013
General Business Conditions (Diffusion Index, %, SA) -6.80 -2.00 -4.20 -11.40 -2.35 11.88 3.88
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 46.5 45.0 50.1 44.7 48.9 52.4 50.0
  New Orders -5.60 -7.50 1.00 -17.00 -5.62 7.91 1.15
  Shipments -0.60 -9.40 9.00 -8.80 3.98 12.07 4.54
  Unfilled Orders -10.40 -11.60 -9.30 -15.10 -10.51 -9.03 -8.73
  Delivery Time -11.30 -6.30 -4.10 -11.30 -5.33 -5.17 -3.52
  Inventories -12.30 -12.50 -4.10 -7.50 -7.07 -1.81 -5.72
  Number of Employees -4.70 -14.30 -1.00 -8.50 2.73 10.85 3.73
  Prices Paid 22.60 17.00 15.50 0.90 8.83 20.90 21.54
Expectations 6 Months Ahead 36.00 34.50 23.70 23.30 30.37 40.23 33.24
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