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Economy in Brief

Empire State Factory Sector Activity Index Declines
by Tom Moeller  August 15, 2016

The Empire State Factory Index of General Business Conditions declined during August to -4.21, the lowest level in three months. Expectations had been for 1.3 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 improved to 50.1 from 48.9. Since inception in 2001, the business conditions index has had a 64% correlation with the change in real GDP.

A weaker delivery time index was accompanied by firmer shipments. New orders improved slightly, while inventories and unfilled orders turned less negative. The employment measure remained below zero, but made up most of its July deterioration. During the last ten years there has been a 68% correlation between the index level and the m/m change in factory sector payrolls. The workweek component also turned positive following three months in negative territory.

The prices paid index eased to 15.46, but remained up from its October low of 0.94. Nineteen percent of respondents paid higher prices while three percent paid less. The index of prices received remained slightly positive.

The index of expectations for business conditions in six months declined sharply to the lowest level since February. Shipments, new orders, employment and prices deteriorated versus the prior month. Capital spending plans also deteriorated along with intended technology spending.

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 Aug Jul Jun Aug'15 2015 2014 2013
General Business Conditions (Diffusion Index, %, SA) -4.21 0.55 6.01 -12.79 -2.34 11.89 3.88
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 50.1 48.9 50.3 45.3 48.9 52.4 50.0
  New Orders 1.04 -1.82 10.90 -14.57 -5.62 7.91 1.15
  Shipments 9.01 0.70 9.32 -12.65 3.97 12.09 4.55
  Unfilled Orders -9.28 -12.09 -10.20 -4.55 -10.52 -9.03 -8.74
  Delivery Time -4.12 3.30 -2.04 -4.55 -5.32 -5.17 -3.52
  Inventories -4.12 -8.79 -15.31 -17.27 -7.06 -1.80 -5.73
  Number of Employees -1.03 -4.40 0.00 1.82 2.72 10.85 3.73
  Prices Paid 15.46 18.68 18.37 7.27 8.84 20.90 21.53
Expectations 6 Months Ahead 23.74 29.24 34.84 31.49 30.38 40.22 33.25
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