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Economy in Brief

Empire State Factory Sector Activity Index Improves Further
by Tom Moeller  April 15, 2016

The Empire State Factory Index of General Business Conditions continued to indicate expansion in business activity this month. The New York index increased to 9.56 following its surge into positive territory during March. It was the highest reading since January 2015. Expectations had been for 2.20 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 compatible to the ISM series. The adjusted figure improved to 51.9 from 51.1. It was above the break-even level of 50 for the second time since June. Since inception in 2001, the business conditions index has had a 65% correlation with the change in real GDP.

Improvement in the component series was broad-based. New orders increased to 11.14, above 50 for the second time since May. Unfilled orders improved to -0.96, close to the least negative reading since early-2011. Employment rose to 1.92 which indicated positive job growth for the first time since August. During the last ten years there has been a 69% correlation between the index level and the m/m change in factory sector payrolls. Delivery times deteriorated to the slowest pace since February of last year, while the rate of inventory decumulation eased. Shipments growth eased m/m, but remained positive.

The prices paid index jumped to 19.23, its highest level since early last year. It remained down, however, from the 2011 high of 69.89. Twenty four percent of respondents paid higher prices while 5% paid less. The index of prices received improved to 2.88, the first positive figure in three months.

The index of expectations for business conditions in six months increased to 29.40, up sharply from the expansion low of 9.51 three months ago. Strength in shipments, delivery times, employment & prices paid led the improvement. Expected pricing power improved.

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 Apr Mar Feb Apr'15 2015 2014 2013
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 51.9 51.1 47.4 51.8 48.9 52.4 50.0
General Business Conditions (Diffusion Index, %, SA) 9.56 0.62 -16.64 0.57 -2.34 11.89 3.88
  New Orders 11.14 9.57 -11.63 -4.37 -5.62 7.91 1.15
  Shipments 10.17 13.88 -11.56 14.53 3.97 12.09 4.55
  Unfilled Orders -0.96 -3.96 -6.93 -11.70 -10.52 -9.03 -8.74
  Delivery Time 0.96 -3.96 -1.98 -4.26 -5.32 -5.17 -3.52
  Inventories -4.81 -6.93 0.00 2.13 -7.06 -1.80 -5.73
  Number of Employees 1.92 -1.98 -0.99 9.57 2.72 10.85 3.73
  Prices Paid 19.23 2.97 2.97 19.15 8.84 20.90 21.53
Expectations 6 Months Ahead 29.40 25.52 14.48 36.24 30.38 40.22 33.25
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