Empire State Manufacturing Activity Rebounds During April
by:Tom Moeller
|in:Economy in Brief
Summary
- Index jumps to highest level in nine months.
- New orders and shipments surge.
- Prices paid weaken.
- Expectations improve modestly.
The Federal Reserve Bank of New York reported that its index of factory sector activity jumped to 10.8 from -24.6 in March and from -5.8 in February. A reading of -16.5 had been expected in the Action Economics Forecast Survey. Thirty-five percent of respondents reported improved business conditions over the month while 24% reported deterioration. The most recent survey was taken between April 3 and April 10. The headline index reflects the answer to only one question concerning general business conditions and is not calculated from components.
Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. This calculated index jumped to 54.9 from 44.5, above the critical level of 50, which is the break-even point between rising and falling activity. It had been below 50 for three straight months.
Individual components were mixed in April, strength was led by the new orders reading which surged to 25.1 from -21.7. Shipments jumped to 23.9 from -13.4 and inventories increased to 8.2 from -1.9. Unfilled orders improved to zero from -6.7 and the delivery time index rose also to zero from -7.6, suggesting longer delivery times. The employment index rose to -8.0 from -10.1, but it was the third consecutive reading suggesting lower employment levels. The average workweek index of -6.4 was the fifth consecutive negative figure, thus again indicating fewer hours worked.
Pricing power weakened this month. The prices paid index fell to 33.0 from 41.9. It reached a high of 86.4 twelve months ago. A greatly lessened 36.1% of respondents reported paying higher prices for inputs while only 3.1% reported paying less. The prices received index improved slightly to 23.7 from 22.9 in March. Twenty-nine percent of respondents reported receiving higher prices while 5.2% reported receiving lower prices.
The index of expected general business conditions in six months rose to 6.6 from 2.9, continuing to suggest that firms do not expect much improvement over the next six months. New orders, shipments and employment are expected to increase modestly, but the employment measure rose sharply. The indexes of expected prices paid and prices received both rose slightly but remained sharply below earlier highs. Capital expenditures are still expected to rise but at a slow pace.
The N.Y. Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
Global
