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Economy in Brief

Empire State Business Conditions Index Falls
by Tom Moeller  May 15, 2017

The Empire State Manufacturing Index of General Business Conditions for May fell to -1.0 from 5.2 in April, down from February's peak reading of 18.7. A reading of 6.3 was expected in the Action Economics Forecast Survey. These data, reported by the Federal Reserve Bank of New York, 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 fell to 52.4 from 55.5, its lowest level in three months. During the last ten years, the index posted a 63% correlation with the change in real GDP.

The new orders component fell into negative territory for the first time since October, and the unfilled orders and inventories series also turned negative. The shipments, delivery times series also weakened. The employment index reversed just a piece of its recent strength. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls.

The prices paid series declined m/m but remained up y/y. Twenty-five percent of respondents reported paying higher prices, while five percent reported them lower. The prices received index similarly declined sharply to the lowest level since December.

Expectations of business conditions six months ahead was little changed m/m and remained well below the January peak. The unfilled orders, delivery times, workweek and employment series fell, but other component indexes increased. Expected prices paid fell to a six-month low. The capital expenditure index reversed the prior month's increase and fell to the lowest level in six months. The technology spending index eased.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey May Apr Mar May'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) -1.0 5.2 16.4 -9.0 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 52.4 55.5 54.9 48.2 48.2 48.9 52.4
  New Orders -4.4 7.0 21.3 -4.7 -0.7 -5.6 7.9
  Shipments 10.6 13.7 11.3 1.5 1.8 4.0 12.1
  Unfilled Orders -3.7 12.4 14.2 -6.2 -8.8 -10.5 -9.0
  Delivery Time 6.7 16.1 10.6 -6.3 -4.8 -5.3 -5.2
  Inventories -0.7 3.6 -2.7 -7.3 -9.6 -7.1 -1.8
  Number of Employees 11.9 13.9 8.8 2.1 -5.0 2.7 10.9
  Average Employee Workweek 7.5 8.8 15.0 -8.3 -5.4 -5.3 1.4s
  Prices Paid 20.9 32.8 31.0 16.7 15.7 8.8 20.9
Expectations 6 Months Ahead 39.3 39.9 37.4 27.7 29.0 30.3 40.2
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