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Economy in Brief

Empire State Manufacturing Index Retreat Suggests Continued Slow Growth
by Tom Moeller  March 15, 2019

Slow growth in industrial sector activity is ongoing. That's the message from the latest survey of factory sector activity in New York state. The Empire State Manufacturing Index of General Business Conditions fell to 3.7 this month and reversed its February improvement. The latest level was the lowest since November 2016. The Action Economics Forecast Survey expected improvement to 10.0 in March. The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York, northern New Jersey and southern Connecticut.

Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The calculated figure held steady at 52.6 and remained near its two-year low. During the last ten years, the index has had a 50% correlation with the quarter-to-quarter change in real GDP.

Deterioration in the component series was evident in a lower new orders, shipments and delivery times indexes. The new orders index was near a two-year low. The lower supplier delivery index suggested significantly quicker delivery speeds versus early last year. The unfilled orders and inventory readings improved slightly.

The employment index rebounded to its highest level in three months, after falling sharply from last June's high. An improved 18% of respondents reported increased employment, while a lessened five percent showed a decrease. During the last ten years, there has been a 70% correlation between the employment index and the month-to-month change in factory sector payrolls. The employee workweek reading deteriorated to the lowest level since November 2016 and was down sharply from the high last April.

The prices paid index rebounded and reversed most of is deterioration to the lowest level since November 2017. It remained down sharply from the high nine months ago. Thirty-seven percent of respondents indicated increased prices this month while three percent reported a decrease. Moving the other way, the prices received index declined after improving sharply in the prior months.

The series measuring expectations for business conditions in six months slipped following its February rebound. Changes amongst the component series were mixed.

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 Mar Feb Jan Mar'18 2018 2017 2016
General Business Conditions (Diffusion Index, %, SA) 3.7 8.8 3.9 21.9 19.8 16.1 -2.6
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 52.6 52.5 51.9 57.0 56.4 54.6 48.1
  New Orders 3.0 7.5 3.5 15.3 16.5 14.5 -0.9
  Shipments 7.7 10.4 17.9 24.6 20.4 15.9 1.9
  Unfilled Orders 2.2 -0.7 -7.6 12.7 3.5 1.9 -8.8
  Delivery Time 1.4 5.0 -2.1 16.2 9.1 6.1 -4.8
  Inventories 0.0 -1.4 -7.6 5.6 5.9 1.5 -9.6
  Number of Employees 13.8 4.1 7.4 8.1 12.4 8.1 -5.1
  Average Employee Workweek -3.4 2.5 6.8 5.5 7.8 4.6 -5.1
  Prices Paid 34.1 17.1 35.9 50.3 45.8 29.0 15.7
  Prices Received 18.1 22.9 13.1 22.4 19.3 11.0 0.7
Expectations 6 Months Ahead 29.6 32.3 17.8 44.1 35.2 42.7 29.0
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