Manufacturing in the New York region accelerated in January, propelled by gains in orders and sales that signal factories will keep contributing to the expansion.
The Federal Reserve Bank of New York’s general economic index rose to 11.9 from a revised 9.9 in December. Economists projected an increase to 12.5, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.
Rising exports and demand for business equipment are boosting demand at manufacturers such as Intel Corp. Improving consumer spending may fuel production even more, giving the recovery an additional boost this year that may persuade companies to ratchet up hiring.
“The manufacturing sector did a stellar job of getting the recovery going and keeping it alive,” Ellen Zentner, senior macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “If we could get manufacturing and consumer up together that would be great” for the economy.
Stock-index futures fluctuated between gains and losses after the report as Citigroup Inc.’s earnings misses analysts’ estimates. The contract on the Standard & Poor’s 500 Index maturing in March rose 0.2 percent to 1,288.3 at 8:34 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.29 percent from 3.33 percent late yesterday.
The 51 economists’ estimates in the Bloomberg survey ranged from 5 to 20. The data include the annual benchmark revisions.
Today’s report is one of the first regional measures of manufacturing for this month. The Philadelphia Fed is scheduled to release its report on Jan. 20.
The Fed last week said holiday-season spending and increased manufacturing drove the economic expansion across the U.S. in November and December, with businesses cautiously optimistic about their 2011 outlooks.
Manufacturing “continued to recover across all Districts” and Richmond, Chicago and St. Louis respondents “identified a strong flow of new orders” while the Philadelphia region said demand was “erratic,” the central bank said its so-called Beige Book report.
Every sub-index of the report improved this month. The Empire State gauge of new factory orders climbed to 12.4 from 2 last month, a measure of shipments increased to 25.4 from 7.2 and employment rose to 8.4 from minus 3.4.
Manufacturers nationally added 136,000 workers to their payrolls last year, according to Labor Department data. In December, factory payrolls rose by 10,000, the first increase in five months.
Today’s report showed an index of prices paid rose to 35.8 from 28.4 in December, while prices received increased to 15.8 from 3.4. The gains signal factories are having some success in passing increasing raw-material costs to customers.
Factory executives in the New York Fed’s district were more optimistic about the future. The gauge measuring the outlook six months from now climbed to 59 from 48.9.
Manufacturing makes up 11 percent of the U.S. economy and about 6 percent of the New York economy.
Overseas demand is helping to support factories. Exports rose 0.8 percent in November to the highest level since August 2008, according to Commerce Department data released Jan. 13.
Intel expects revenue to rise 10 percent this year, Chief Financial Officer Stacy Smith said in a Jan. 13 interview. The remarks came after the world’s largest maker of computer chips forecast first-quarter sales that may exceed analysts’ estimates. Santa Clara, California-based Intel had revenue of $43.6 billion in 2010, an increase of 24 percent from 2009.
“In 2011, everything gets better,” Paul Otellini, the company’s chief executive officer, said on a teleconference with analysts. “The economy is forecast to improve.”
© Copyright 2022 Bloomberg News. All rights reserved.