Empire State Manufacturing Index (ESMI)

The Empire State Manufacturing Index (ESMI) is a survey conducted by the Federal Reserve Bank of New York targeting manufacturing firms in New York State. It serves to assess the health and performance of the manufacturing sector in the region.

As a significant indicator of the state's economic vitality, the ESMI offers a snapshot of current manufacturing trends and acts as a reliable representation of the broader U.S. manufacturing industry.

The Empire State Manufacturing Index is a monthly survey carried out by the Federal Reserve Bank of New York. The survey is distributed on the first day of each month to approximately 200 manufacturing executives in New York State, usually the president or CEO.

This survey gathers information on various facets of manufacturing activity, including new orders, shipments, employment, prices, and overall business conditions.

Grasping the Empire State Manufacturing Index involves several key points:

• Diffusion index: The ESMI functions as a diffusion index, measuring the extent of expansion or contraction in manufacturing activity. A reading above zero indicates growth, while a reading below zero indicates decline.
• Components: The ESMI consists of multiple sub-indices, each representing a different aspect of manufacturing activity. These sub-indices include new orders, shipments, employment, prices paid, and prices received.
• Seasonal adjustments: The index values are adjusted for seasonal variations to account for changes related to holidays, weather, or production cycles.

The Empire State Manufacturing Index holds significance for several reasons:

• Economic indicator: The ESMI is a leading indicator for New York State’s manufacturing sector, a crucial part of the state’s economy. A robust manufacturing sector can lead to job creation and overall economic prosperity.
• Proxy for the broader U.S. manufacturing industry: The index can also act as a proxy for the wider U.S. manufacturing sector, as New York’s manufacturing landscape shares characteristics with other regions.
• Investment tool: Investors can utilize the ESMI to guide their decisions regarding stocks, bonds, or other investments linked to the manufacturing sector.
• Policy analysis: Policymakers and economists can leverage the ESMI to evaluate the effects of monetary and fiscal policies on the manufacturing sector and assess the overall economic health.

The Empire State Manufacturing Index is calculated and published by the Federal Reserve Bank of New York, one of the twelve regional banks within the Federal Reserve System.

The Empire State Manufacturing Index is released monthly, typically around the middle of the month. The index data and reports can be accessed through the Federal Reserve Bank of New York’s website. Additionally, various financial news outlets and market data providers offer coverage and analysis of the ESMI.