Global| Dec 15 2016Empire State Survey Signals a Brighter Business Outlook
Summary
The Empire State Manufacturing Index of General Business Conditions for December continued to improve, rising to 9.0 (up from 1.5 in November), which was its highest reading since April. According to the Action Economics Forecast [...]
The Empire State Manufacturing Index of General Business Conditions for December continued to improve, rising to 9.0 (up from 1.5 in November), which was its highest reading since April. According to the Action Economics Forecast Survey, markets had expected a smaller increase to 3.0. These data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York, northern New Jersey and southern Connecticut.
According to the survey, new orders have made a huge turn in the past two months, rising a total of 17 points to a December reading of 11.4. The latest reading was the highest since mid-2014, suggesting continued gains in business activity. Shipments also were solid, remaining at 8.5. Other indicators of current conditions, however, were not so positive. Inventories and order backlogs fell and delivery times slowed. Also, labor market conditions in the region remained soft.
Based on these index components, Haver Analytics calculates a seasonally adjusted index that is comparable to other business surveys. The Empire ISM-adjusted index shows that business in the New York area has been relatively soft in recent months, but improving. The index increased for the third straight month to relatively low 48.6 in December.
The best news in this report was the sharp upswing in the six-month outlook, suggesting that regional businesses have recently become very optimistic. The Empire future business conditions index surged by 20 points to 50.2, which was the biggest gain and the highest reading in five years. 61 percent of businesses anticipate better conditions in coming months. Notably, the indexes for future orders, shipments and capital spending were strong. Also, expectations for the labor market were healthy, in contrast to the soft current labor market assessment.
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 | Dec | Nov | Oct | Dec'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| General Business Conditions (Diffusion Index, %, SA) | 9.0 | 1.5 | -6.8 | -6.2 | -2.4 | 11.9 | 3.9 |
| General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) | 48.6 | 47.2 | 46.5 | 46.2 | 48.9 | 52.4 | 50.0 |
| New Orders | 11.4 | 3.1 | -5.6 | -6.2 | -5.6 | 7.9 | 1.2 |
| Shipments | 8.5 | 8.5 | -0.6 | 4.6 | 4.0 | 12.1 | 4.5 |
| Unfilled Orders | -10.4 | -12.7 | -10.4 | -16.2 | -10.5 | -9.0 | -8.7 |
| Delivery Time | -7.8 | -5.5 | -11.3 | -8.1 | -5.3 | -5.2 | -3.5 |
| Inventories | -13.9 | -23.6 | -12.3 | -12.1 | -7.1 | -1.8 | -5.7 |
| Number of Employees | -12.2 | -10.9 | -4.7 | -16.2 | 2.7 | 10.9 | 3.7 |
| Prices Paid | 22.6 | 15.5 | 22.6 | 4.0 | 8.8 | 20.9 | 21.5 |
| Expectations 6 Months Ahead | 50.2 | 29.9 | 36.0 | 35.6 | 30.4 | 40.2 | 33.2 |
Peter D'Antonio
AuthorMore in Author Profile »Peter started working for Haver Analytics in 2016. He worked for nearly 30 years as an Economist on Wall Street, most recently as the Head of US Economic Forecasting at Citigroup, where he advised the trading and sales businesses in the Capital Markets. He built an extensive Excel system, which he used to forecast all major high-frequency statistics and a longer-term macroeconomic outlook. Peter also advised key clients, including hedge funds, pension funds, asset managers, Fortune 500 corporations, governments, and central banks, on US economic developments and markets. He wrote over 1,000 articles for Citigroup publications. In recent years, Peter shifted his career focus to teaching. He teaches Economics and Business at the Molloy College School of Business in Rockville Centre, NY. He developed Molloy’s Economics Major and Minor and created many of the courses. Peter has written numerous peer-reviewed journal articles that focus on the accuracy and interpretation of economic data. He has also taught at the NYU Stern School of Business. Peter was awarded the New York Forecasters Club Forecast Prize for most accurate economic forecast in 2007, 2018, and 2020. Peter D’Antonio earned his BA in Economics from Princeton University and his MA and PhD from the University of Pennsylvania, where he specialized in Macroeconomics and Finance.
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