Manufacturing in the Philadelphia region expanded in March at the fastest pace since 1984 as orders to factories jumped.
The Federal Reserve Bank of Philadelphia’s general economic index rose to 43.4, exceeding the highest estimate in a Bloomberg News survey of economists, from 35.9 the prior month. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Rising exports to emerging economies such as China, along gains in business investment and inventory rebuilding are underpinning factory production. The figures underscore the Federal Reserve’s view that the economic expansion is on “firmer footing.”
“U.S. manufacturing has benefited from the recovery globally, particularly in emerging economies,” Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said before the report. American factories have also “begun to see a turnaround in orders for consumer goods.”
Economists surveyed by Bloomberg forecast the index would fall to 28.8, according to the median estimate of 56 economists surveyed by Bloomberg News. Estimates ranged from 22 to 37.5.
The Philadelphia Fed’s new orders measure increased to 40.3 in March, the highest since November 1983, from 23.7 the prior month. The shipments gauge fell to 34.9 from 35.2 in February.
A measure of factory inventories increased to a five-year high of 12 in March from 2.1 a month earlier.
The employment index in the Philadelphia Fed report declined to 18.2 in March after jumping last month to 23.6, the highest level since April 1973. A measure of the average workweek increased to 13.2 in March from 12.8 in February.
The index of prices paid decreased to 63.8 from 67.2 the prior month, while the measure of prices received rose to 22.6 from 21.
Production at U.S. factories, mines and utilities fell 0.1 percent in February, reflecting a drop in utility use, the Fed said earlier today. Manufacturing output increased 0.4 percent after a revised 0.9 percent gain in January that was three times as large as the prior estimate.
A report from the New York Fed this week showed manufacturing in that region accelerated in March even as measures of orders and shipments slowed. The bank’s general economic index rose to a nine-month high of 17.5 from 15.4 in February.
Individual measures in the Philadelphia index don’t contribute to the headline reading, so some economists consider it a gauge of sentiment among manufacturers.
Economists monitor Philadelphia and New York Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing during the month. The ISM will release its report on April 1.
Overseas demand for American goods is helping support U.S. manufacturing, which makes up about 11 percent of the economy. Exports rose 2.7 percent in January to a record level, according to Commerce Department data released March 10.
Factories boosted payrolls by 86,000 workers in the first two months of the year, the best two-month gain since October- November 1997, according to Labor Department data.
Eastman Chemical Co., based in Kingsport, Tennessee, on March 1 boosted its 2011 earnings guidance, citing improved strength in its “core business.”
Chief Executive Officer Jim Rogers said the specialty plastics segment should increase operating earnings by more than 50 percent by 2013 compared with 2010, according to a statement. The company’s fibers segment is expected to strengthen its position in Asia-Pacific with its new South Korea fibers manufacturing facility, and the company also plans a joint venture with a Chinese tobacco company.
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