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Economy in Brief

Empire State Manufacturing Index Continues to Improve
by Tom Moeller  August 15, 2018

The Empire State Manufacturing Index of General Business Conditions increased to 25.6 in August, its highest level since October. The Action Economics Forecast Survey expected a reading of 20.0. These data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York, northern New Jersey and southern Connecticut.

Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The calculated figure rose to 56.6, from 55.2 but that remained below the June high of 58.2. During the last ten years, the index had a 68% correlation with the q/q change in real GDP.

Most of the components of the Empire State Survey improved this month. The shipments, unfilled orders, inventories and the delivery times readings rose. The new orders fell modestly, however, for a second month.

The number of employees series also fell for a second month, but remained up sharply from its January low. During the last ten years, there has been a 77% correlation between the employment index and the m/m change in factory sector payrolls. A lessened 20% of respondents reported increased employment while a stable 7% reported a decease. The employee workweek reading improved moderately but remained well below its April high.

The prices paid index nudged higher following sharp declines in the prior two months. Forty-six percent of respondents indicated increased prices, while just one percent reported a decline. Prices received fell to the lowest level since December.

The series measuring expectations of business conditions in six months improved following a sharp decline in July.

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 Aug Jul Jun Aug'17 2017 2016 2015
General Business Conditions (Diffusion Index, %, SA) 25.6 22.6 25.0 24.2 16.1 -2.6 -2.3
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 56.6 55.2 58.2 54.0 54.6 48.2 48.8
  New Orders 17.1 18.2 21.3 20.9 14.6 -0.8 -5.6
  Shipments 25.7 14.6 23.5 14.1 15.9 1.9 4.0
  Unfilled Orders 11.1 0.0 9.3 -4.7 1.9 -8.8 -10.5
  Delivery Time 10.4 6.0 13.2 5.4 6.1 -4.8 -5.3
  Inventories 0.0 -4.3 5.4 -3.1 1.5 -9.6 -7.1
  Number of Employees 13.1 17.2 19.0 2.6 8.3 -5.1 2.3
  Average Employee Workweek 8.9 5.6 12.0 4.4 4.9 -5.2 -4.8
  Prices Paid 45.2 42.7 52.7 31.0 29.0 15.7 8.8
  Prices Received 20.0 22.2 23.3 6.2 11.0 0.7 1.2
Expectations 6 Months Ahead 34.8 31.1 38.9 44.0 42.6 29.0 30.3
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