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Empire State Manufacturing Conditions Improve Slightly

July 15, 2015

by Jill Mislinski

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 3.9 (3.86 to two decimals) shows an increase from last month's -2.0, which signals a slight improvement in activity.

The Investing.com forecast was for a reading of 3.0.

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

The July 2015 Empire State Manufacturing Survey indicates that business conditions improved slightly for New York manufacturers. The headline general business conditions index climbed six points to 3.9. The new orders index was little changed at -3.5, a sign that orders continued to decline, and the shipments index fell four points to 7.9. Labor market indicators signaled a small increase in employment levels and the average workweek. Price indexes pointed to modest increases in both input prices and selling prices, with the prices paid index reaching its lowest level in three years. Indexes for the six-month outlook suggested that optimism about future business conditions was slightly higher than in June, but in line with the trend over the past six months, expectations for improvement remained subdued.

Here is a chart illustrating both the General Business Conditions and Future General Business Conditions (the outlook six months ahead):

Empire State Manufacturing

Click this link to access a PDF set of charts of the individual components over the past 12 months.

Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction multiple times, as the general trend slowed. It had remained in a relatively narrow range over the past year. The latest reading is a 5 point decline from last month's short bounce back.

Here is an overlay of the current and future conditions (a six month outlook).

Meanwhile, here's another look at the latest ISM Manufacturing Business Activity Index.

ISM Manufacturing PMI

Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (updated after the last monthly Regional update, which is Richmond at the end of the month).

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions - this averages out to approximately zero for the average, which is flat and neither expanding nor contracting.

Let's keep a close eye on some of the regional manufacturing indicators in the months ahead.

Here are the remaining four monthly manufacturing indicators that we track:

Texas Manufacturing Outlook Survey (TMOS)

Kansas City Manufacturing Survey

Fifth District Manufacturing Survey (Richmond)

Philadelphia Fed Manufacturing Business Outlook Survey