What Is the NY Empire State Index?

The NY Empire State Index is the result of a monthly survey of manufacturers in New York state. Known as the Empire State Manufacturing Survey, it is conducted by the Federal Reserve Bank of New York. The headline number for the NY Empire State Index refers to the main index of the survey, which summarizes general business conditions in New York state.

The NY Empire State Index is widely watched by professionals and investors for insights on the state and direction of manufacturing in the influential New York state region. The NY Empire State Index is also known as the Empire State Manufacturing Index.

Key Takeaways

  • The NY Empire State Index reports on the monthly survey of manufacturers in New York state.
  • The headline number for the NY Empire State Index refers to the main index of the survey, which summarizes general business conditions in New York state.
  • Survey participants are asked to rate the change for 11 indicators and for “general business conditions."
  • By using the knowledge of leading executives, the Empire State Index provides a better picture of both the present and the future.

How the NY Empire State Index Works

The NY Empire State Index is based on the survey responses of an unchanged pool of about 200 top manufacturing executives. The president or CEO of the company usually answers the questionnaire, which is sent out on the first day of each month. The survey seeks their opinion on the change in several business indicators from the previous month. It also solicits their six-month projections for those indicators.

The “general business conditions" component of the index is based on a distinct question posed on the Empire State Manufacturing Survey. “General business conditions" is not an average of the other indicators. These 11 indicators are only applicable to the survey respondents' manufacturing facilities in New York state. They include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, and prices received. The remaining indicators are the number of employees (including contract workers), average employee workweek, technology spending, and capital expenditures. Each index is seasonally adjusted when seasonality is detected.

The Empire Manufacturing Survey

Survey participants are asked to rate the change for each indicator and for "general business conditions." They are asked to compare this month to the month before and to estimate the difference six months out. For example, the January survey would ask these executives to rate the change for each indicator compared to December. They also evaluate the likely change in six months compared to January. The executives may choose one of "decrease," "no change," or "increase" for each indicator and "general business conditions."

The "general business conditions" index and the indexes for the other 11 indicators are calculated by adding the percentage of "increase" responses and then subtracting the percentage of "decrease" responses. If 30% of survey respondents marked "increase," 50% chose "no change," and 21% picked "decrease," then the index would show a reading of 9. Index readings are released as absolute numbers to one place after the decimal point.

Benefits of the NY Empire State Index

By using the knowledge of leading executives, the Empire State Index provides a better picture of both the present and the future. The general idea is that executives are closer to what is happening in the real economy than policymakers. What is more, they often have access to insider information that they can use to make better assessments about current conditions. Finally, executives have years of experience interpreting that information. It follows that their conclusions might be more accurate on some matters.