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Economy in Brief

Empire State Factory Sector Index Remains Negative
by Tom Moeller  September 16, 2016

The Empire State Factory Index of General Business Conditions remained below zero during September. The index level of -1.99 was slightly improved, however, versus -4.21 in August. Expectations had been for -1.0 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 declined to 45.0, the lowest level since January. Since inception in 2001, the business conditions index has had a 64% correlation with the change in real GDP.

The employment series deteriorated sharply versus August to the weakest reading since December. 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 fell sharply to its lowest level since December, and inventories deteriorated sharply. Further declines into negative territory were posted by most other component series.

The prices paid index improved slightly to 16.96, and remained up from its October low of 0.94. Nineteen percent of respondents paid higher prices while two percent paid less. The index of prices received remained slightly positive.

The index of expectations for business conditions in six months rebounded to the highest level since June. New orders, employment and prices paid led the advance. Capital spending plans improved 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 Sep Aug Jul Sep'15 2015 2014 2013
General Business Conditions (Diffusion Index, %, SA) -1.99 -4.21 0.55 -12.86 -2.34 11.89 3.88
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 45.0 50.1 48.9 44.8 48.9 52.4 50.0
  New Orders -7.55 1.04 -1.82 -12.52 -5.62 7.91 1.15
  Shipments -9.38 9.01 0.70 -8.07 3.97 12.09 4.55
  Unfilled Orders -11.61 -9.28 -12.09 -8.25 -10.52 -9.03 -8.74
  Delivery Time -6.25 -4.12 3.30 -6.19 -5.32 -5.17 -3.52
  Inventories -12.50 -4.12 -8.79 -18.56 -7.06 -1.80 -5.73
  Number of Employees -14.29 -1.03 -4.40 -6.19 2.72 10.85 3.73
  Prices Paid 16.96 15.46 18.68 4.21 8.84 20.90 21.53
Expectations 6 Months Ahead 34.53 23.74 29.24 23.53 30.38 40.22 33.25
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