March 2016 Empire State Manufacturing Index Climbs Into Expansion


The Empire State Manufacturing Survey improved and is now showing its first positive reading since July of last year.

  • Expectations were for a reading between -15.00 to -7.00 (consensus -11.25) versus the 0.6 reported. Any value above zero shows expansion for the New York area manufacturers.
  • New orders subindex of the Empire State Manufacturing Survey is now in expansion, whilst the unfilled orders sub-index improved by remains in contraction.
  • This noisy index has moved from +6.9 (March 2015), -1.2 (April), +3.1 (May), -2.1 (June), 3.9 (July), -14.9 (August), -14.7 (September), -11.4 (October), -10.7 (November), -4.6 (December), -19.4 (January 2016), -16.6 (February) – and now 0.6.
  • As this index is very noisy, it is hard to understand what these massive moves up or down mean – however this regional manufacturing survey is normally one of the more pessimistic.

    Econintersect reminds you that this is a survey (a quantification of opinion). Please see caveats at the end of this post. However, sometimes it is better not to look to deeply into the details of a noisy survey as just the overview is all you need to know.

    From the report:

    Empire State Manufacturing Survey

    z empire1.PNG

    The above graphic shows that when the index is in negative territory that it is not a signal of a recession – of 8 times in negative territory (since the Great Recession) – no recession occurred. Conversely, a positive number is likely to be indicating economic expansion. Historically, when it does make a correct negative prediction it can be timely – this index was only two months late in going negative after what was eventually determined to be the start of the 2007 recession.

    This survey has a lot extra bells and whistles which take attention away from the core questions: (1) are orders and (2) are unfilled orders (backlog) improving?Econintersect emphasizes these two survey points – and both improved but unfilled orders remain in contraction.

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