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Economy in Brief

Empire State Factory Sector Index Strengthens
by Tom Moeller  October 16, 2017

The Empire State Manufacturing Index of General Business Conditions for October rose to 30.2 following its slip to 24.4 during September. The latest level was the highest since September 2014 and continued to indicate expansion in factory sector activity. It surpassed expectations for 20.0 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 eased to 55.6 from 57.3, but remained near its recent high. During the last ten years, the index posted a 63% correlation with the change in real GDP.

Movement amongst component series as mixed. The shipments series rose and nearly matched its expansion high, but most other series fell including new orders, unfilled orders, delivery times and inventories.

The employment index increased to the highest level in three years. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls. Twenty-three percent of respondents reported a higher payroll level while seven percent reported a decline. The employee workweek reading declined and matched the lowest reading since January.

The prices paid series eased after two months of increase. It nevertheless remained up sharply versus its 2015 low. Thirty-two percent of respondents indicated paying higher prices, while five percent reported them lower. The prices received index backpedaled m/m and has trended sideways this year.

Expectations of business conditions six months ahead rose slightly and reflected higher readings for new and unfilled orders, shipments, inventories and employment. Expected prices received also strengthened.

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 Oct Sep Aug Oct'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 30.2 24.4 25.2 -5.5 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 55.6 57.3 54.1 47.1 48.2 48.9 52.4
  New Orders 18.0 24.9 20.6 -3.1 -0.7 -5.6 7.9
  Shipments 27.5 16.2 12.4 2.8 1.8 4.0 12.1
  Unfilled Orders 2.3 8.9 -4.7 -10.4 -8.8 -10.5 -9.0
  Delivery Time 3.1 14.6 5.4 -11.3 -4.8 -5.3 -5.2
  Inventories -7.8 6.5 -3.1 -12.3 -9.6 -7.1 -1.8
  Number of Employees 15.6 10.6 6.2 -4.7 -5.0 2.7 10.9
  Average Employee Workweek 0.0 5.7 10.9 -10.4 -5.4 -5.3 1.4
  Prices Paid 27.3 35.8 31.0 22.6 15.7 8.8 20.9
Expectations 6 Months Ahead 44.8 39.3 45.2 35.3 29.0 30.3 40.2
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