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August 24, 2011

Just Released: July’s Indexes of Coincident Economic Indicators Show Economic Activity Picking Up across the Region

James Orr

The July Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, reveal that economic activity continued to expand in both New York State and New York City and—for the second month in a row—picked up moderately in New Jersey.

The CEIs reported here are single composite measures designed to provide a monthly reading of economic activity. They are constructed from four data series: payroll employment, the unemployment rate, average weekly hours worked in manufacturing, and real (inflation-adjusted) earnings. Details of the construction of the CEIs can be found in a 1999 article in the Federal Reserve Bank of New York series Current Issues in Economics and Finance; a more recent article in the series illustrates how the CEIs are used in analyzing regional economic trends.

The CEIs indicate that the pace of economic recovery quickened across the region in July. In New York State, activity had bottomed out in November 2009, about five months after the official end of the national recession. The decline was roughly as deep as the decline in the early 2000s, though far less severe than the steep and prolonged decline in the early 1990s. July’s increase of 4.4 percent, at an annualized rate, improves upon June’s 3.0 percent increase and continues the generally steady recovery of activity since November 2009. To date, however, only about one-third of the decline in activity in the state has been recouped.

The index for New York City shows that after reaching a low point in November 2009, activity has been on a sustained recovery. The decline in activity was not as deep as was feared at the onset of the recession and financial crisis. In fact, the decline was not as steep or as long-lasting as either of the earlier two downturns in the city. July’s increase of 5.3 percent at an annualized rate maintained the solid pace of expansion that has characterized the city now for more than a year. Activity has been accelerating for about the past nine months, and the level of economic activity in July was only a few percentage points below that at the city’s previous cyclical peak.

The index for New Jersey suggests that economic activity is picking up. The sharp decline in activity in the state began about the same time as the national recession and, although the decline ended roughly eighteen months ago, activity through May of this year was essentially flat. July’s reading of a 3.8 percent increase, at an annualized rate, builds upon June’s increase of 3.6 percent. Activity in the state has now increased for the past six months, although the level of activity is still only slightly above its year-ago level.

All in all, July’s report shows that the pace of growth of economic activity has picked up in New York State, New York City, and New Jersey. Updates to the regional CEIs are provided on a monthly basis.

The views expressed in this blog are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

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