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Economy in Brief

Empire State Business Activity Strengthens
by Tom Moeller  August 15, 2017

The Empire State Manufacturing Index of General Business Conditions for August jumped 15.4 points from July. The latest level of 25.2 was the highest since September 2014, and continued to indicate expansion in factory sector activity. It exceeded expectations for 10.1 in the Action Economics Forecast Survey. These data, reported by the Federal Reserve Bank of New York, 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 rose slightly to 54.1 and was up sharply y/y. During the last ten years, the index posted a 63% correlation with the change in real GDP.

The component series mostly improved, including higher figures for shipments, new orders and delivery times. The inventories figure fell and the unfilled orders reading held steady at the lowest level since December.

The employment index increased slightly and made up most of its July decline. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls. Fourteen percent of respondents reported a higher payroll level while ten percent reported a decline. The employee workweek reading rose to the highest level since March.

The prices paid series increased to the highest level since April, but remained below its February high. Thirty-two percent of respondents reported paying higher prices, while one percent reported them lower. The prices received index slipped and remained well below the February peak.

Expectations of business conditions six months ahead increased sharply to the highest level since January. Movement in component series was mixed, however, with shipments strengthening, but employment at the lowest level in nearly a year.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Aug Jul Jun Aug'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 25.2 9.8 19.8 -3.2 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 54.1 53.5 56.1 49.7 48.2 48.9 52.4
  New Orders 20.6 13.3 18.1 1.0 -0.7 -5.6 7.9
  Shipments 12.4 10.5 22.3 5.8 1.8 4.0 12.1
  Unfilled Orders -4.7 -4.7 4.6 -9.3 -8.8 -10.5 -9.0
  Delivery Time 5.4 4.7 5.4 -4.1 -4.8 -5.3 -5.2
  Inventories -3.1 2.4 7.7 -4.1 -9.6 -7.1 -1.8
  Number of Employees 6.2 3.9 7.7 -1.0 -5.0 2.7 10.9
  Average Employee Workweek 10.9 0.0 8.5 2.1 -5.4 -5.3 1.4
  Prices Paid 31.0 21.3 20.0 15.5 15.7 8.8 20.9
Expectations 6 Months Ahead 45.2 34.9 41.7 26.9 29.0 30.3 40.2
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