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Economy in Brief

Empire State Business Activity Moderates
by Tom Moeller  July 17, 2017

The Empire State Manufacturing Index of General Business Conditions for July declined ten points from June to 9.8. The figure nevertheless continued to indicate a moderate expansion in factory sector activity. It disappointed expectations for 15.0 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 53.5 and reversed most of its June rise. During the last ten years, the index posted a 63% correlation with the change in real GDP.

Deterioration amongst the component series was broad-based, including lower figures for new & unfilled orders, shipments and inventories. The delivery times fell and continued to indicate the quickest product delivery speeds since January.

The employment index declined to the lowest level since February and the employee workweek reading also fell sharply. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls. Fourteen percent of respondents reported a higher payroll level while ten percent reported a decline.

The prices paid series improved modestly to the highest level in three months, but remained well below its February high. Twenty-six percent of respondents reported paying higher prices, while five percent reported them lower. The prices received index ticked higher, but remained well below the February peak.

Expectations of business conditions six months ahead fell sharply to the lowest level since November. Declines in the component series were broadly distributed.

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 Jul Jun May Jul'16 2016 2015 2014
General Business Conditions (Diffusion Index, %, SA) 9.8 19.8 -1.0 -0.5 -2.5 -2.3 11.9
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 53.5 56.1 52.4 48.9 48.2 48.9 52.4
  New Orders 13.3 18.1 -4.4 -1.7 -0.7 -5.6 7.9
  Shipments 10.5 22.3 10.6 0.6 1.8 4.0 12.1
  Unfilled Orders -4.7 4.6 -3.7 -12.1 -8.8 -10.5 -9.0
  Delivery Time 4.7 5.4 6.7 3.3 -4.8 -5.3 -5.2
  Inventories 2.4 7.7 -0.7 -8.8 -9.6 -7.1 -1.8
  Number of Employees 3.9 7.7 11.9 -4.4 -5.0 2.7 10.9
  Average Employee Workweek 0.0 8.5 7.5 -5.5 -5.4 -5.3 1.4
  Prices Paid 21.3 20.0 20.9 18.7 15.7 8.8 20.9
Expectations 6 Months Ahead 34.9 41.7 39.3 29.5 29.0 30.3 40.2
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