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Economy in Brief

Empire State Factory Sector Activity Index Rebounds
by Tom Moeller  June 15, 2016

The Empire State Factory Index of General Business Conditions recovered in June much of its May deterioration. The New York index rose to 6.01 following its unrevised decline to -9.02. Twenty eight percent of respondents reported a higher level of business activity while 22% reported a decrease. Expectations had been for -4.0 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 comparable to the ISM series. The adjusted figure increased to the roughly break-even level of 50.3 from 48.0,. Since inception in 2001, the business conditions index has had a 65% correlation with the change in real GDP.

The new orders reading rebounded to 10.90 following one month in negative territory. Shipments also posted a positive reading, while delivery times shortened by a lesser degree. Running counter to these indications was the employment figure which fell to 0.00. It was the lowest level in three months. During the last ten years there has been a 69% correlation between the index level and the m/m change in factory sector payrolls. The workweek figure improved slightly, but the inventory index fell, showing the quickest rate of decumulation since November.

The prices paid index increased to 18.37 and recovered most of its May decline, remaining near the 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 4% paid less. The index of prices received remained in negative territory, where it has been for four months this year.

The index of expectations for business conditions in six months improved to 34.84, up sharply from the expansion low of 9.51 in January. The component series showed mixed movement. For example, orders were up but employment was down. Expected capital expenditures rebounded somewhat after a sharp decline.

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 Jun May Apr Jun'15 2015 2014 2013
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 50.3 48.1 51.9 51.6 48.9 52.4 50.0
General Business Conditions (Diffusion Index, %, SA) 6.01 -9.02 9.56 -2.05 -2.34 11.89 3.88
  New Orders 10.90 -5.54 11.14 -3.02 -5.62 7.91 1.15
  Shipments 9.32 -1.94 10.17 9.97 3.97 12.09 4.55
  Unfilled Orders -10.20 -6.25 -0.96 -4.81 -10.52 -9.03 -8.74
  Delivery Time -2.04 -6.25 0.96 -1.92 -5.32 -5.17 -3.52
  Inventories -15.31 -7.29 -4.81 1.92 -7.06 -1.80 -5.73
  Number of Employees 0.00 2.08 1.92 8.65 2.72 10.85 3.73
  Prices Paid 18.37 16.67 19.23 9.62 8.84 20.90 21.53
Expectations 6 Months Ahead 34.84 28.48 29.40 27.68 30.38 40.22 33.25
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