Tags: Manufacturing | Philadelphia | economy | shrink

Manufacturing in Philadelphia Region Shrinks for First Time in 8 Months

Thursday, 17 May 2012 10:36 AM

Manufacturing in the Philadelphia region unexpectedly shrank in May for the first time in eight months, reflecting a drop in orders and employment.

The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 5.8 this month, the lowest reading since September, from 8.5 in the previous month. Economists forecast the gauge would rise to 10, according to the median estimate in a Bloomberg News survey. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Slower economies in Europe and China may restrain exports and limit orders to U.S. factories, which have been a mainstay of the almost three-year-old expansion. At the same time, increased demand for automobiles, which sold in the first quarter at the fastest pace in four years, is helping underpin manufacturing.

“It looks like manufacturing got a little ahead of itself in the first quarter,” Aaron Smith, a senior economist at Moody’s Analytics in New York, said before the report. “That’s part of the reason we’re seeing a slowing now.”

Estimates from 59 economists surveyed by Bloomberg ranged from 2.5 to 14.

Other reports today showed More Americans than forecast filed applications for unemployment benefits last week, the Bloomberg Consumer Comfort Index dropped to the lowest level in almost four months, and the index of leading economic indicators unexpectedly decreased in April.

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Thursday, 17 May 2012 10:36 AM
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