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Economy in Brief

Empire State Factory Sector Activity Remains Depressed
by Tom Moeller  February 16, 2016

The Empire State Factory Index of General Business Conditions continues to indicate declines in manufacturing sector activity. The New York index nudged up to -16.64 during February, but remained near the lowest level since April 2009. Expectations had been for -10.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve 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 compatible to the ISM series. The adjusted figure rebounded to 47.4 from a revised 43.0. It indicated m/m improvement, but remained below break-even for the eighth straight month. A falling level of activity is indicated by a figure below 50. Since inception in 2001, the business conditions index has had a 65% correlation with the change in real GDP.

The degree of improvement in the component series varied. New orders and shipments gained slightly but remained near the recent lows. Unfilled orders, inventories & delivery times each increased sharply. Employment also increased sharply to the highest level in six months. During the last ten years, there has been a 69% correlation between the index level and the change in nonfarm payrolls, although the correlation has broken down during the last year.

The prices paid index declined sharply to a four-month low. Sixteen percent (NSA) of respondents reported paying higher prices while 13 percent paid less.

The General Business Conditions Index, Six Months Ahead also improved slightly but remained near the recovery low. Modest improvement in each of the component series was logged except for prices paid, which fell to an expansion low. Expectations for capital spending also deteriorated.

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 Feb Jan Dec Feb'15 2015 2014 2013
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 47.4 43.0 46.2 52.5 48.9 52.4 50.0
General Business Conditions (Diffusion Index, %, SA) -16.64 -19.37 -6.21 7.71 -2.34 11.89 3.88
 New Orders -11.63 -23.54 -6.18 1.55 -5.62 7.91 1.15
 Shipments -11.56 -14.39 4.62 14.07 3.97 12.09 4.55
 Unfilled Orders -6.93 -11.00 -16.16 -6.74 -10.52 -9.03 -8.74
 Delivery Time -1.98 -13.00 -8.08 1.12 -5.32 -5.17 -3.52
 Inventories 0.00 -6.00 -12.12 -2.25 -7.06 -1.80 -5.73
 Number of Employees -0.99 -13.00 -16.16 10.11 2.72 10.85 3.73
 Prices Paid 2.97 16.00 4.04 14.61 8.84 20.90 21.53
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