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Empire State Manufacturing Surges, Best Reading Since May 2012

  • Written by Syndicated Publisher No Comments Comments
    January 16, 2014

    This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions dramatically topped expectations, posting a reading of 12.51, up from 2.22 last month. The Investing.com forecast was for 3.75. The Empire State Manufacturing Index rates the relative level of general business conditions 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.

    Today’s reading is the highest since May 2012.

    Also, this update incorporates the annual benchmark revision using new seasonal factors.

    Here is the opening paragraph from the report.

    The January 2014 Empire State Manufacturing Survey indicates that business activity expanded for New York manufacturers, and did so at a faster pace than in recent months. The general business conditions index rose ten points to 12.5, its highest level in more than a year. The new orders index climbed thirteen points to 11.0, a two-year high, and the shipments index rose to 15.5. The unfilled orders index remained negative at -8.5. The indexes for both prices paid and prices received were significantly higher, pointing to an acceleration in the pace of input and selling price increases. Employment indexes indicated an improvement in labor market conditions. Indexes for the six-month outlook continued to convey a fair degree of optimism about future conditions.

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

    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 five times, the most recent being the latest data point. However the expansionary interim highs since the post-recession peak in October 2009 have gotten successively smaller, which is indicative of a generally slowing regional economy.

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

    I’ll keep a close eye on some of the regional manufacturing indicators in the months ahead.

    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.

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