Tags: Mid-Atlantic | Manufacturing | Inches | Higher | Stays | Weak

Mid-Atlantic Manufacturing Inches Higher But Stays Weak

Thursday, 21 October 2010 10:35 AM

Manufacturing in the Philadelphia region expanded in October for the first time in three months as measures of employment and sales increased.

The Federal Reserve Bank of Philadelphia’s general economic index rose to 1.0 from minus 0.7 a month earlier. Readings greater than zero suggest expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. A gauge of business expectations six months from now rose to the highest level since April.

Improving demand from overseas and a pickup in business spending on equipment may keep benefitting American manufacturers, helping bolster the world’s largest economy. The rebuilding of stockpiles, which helped drive the factory rebound earlier in the recovery, will probably cool following eight consecutive gains in inventories.

“Demand in the U.S. remains weak but thanks to relatively robust exports manufacturing and the economy will continue to grow,” Tom Porcelli, an economist at RBC Capital Markets Corp. in New York who formerly worked on the New York Fed’s markets desk.

Economists forecast the index would increase to 2, according to the median of 53 projections in a Bloomberg News survey. Estimates ranged from minus 5 to a gain to 9.

Another report from the Labor Department today showed initial jobless claims declined by 23,000 to 452,000 last week, a level that’s consistent with little improvement in the labor market.

Shipments, Employment

The Philadelphia Fed bank’s shipments gauge rose to 1.4 from minus 7.1 in September. The employment index increased to 2.4 from 1.8 a month earlier.

Factories nationally may be restrained in adding to their workforces after being among the leading industries in payroll gains earlier in the year. The U.S. lost 34,000 manufacturing jobs in August and September, after adding 170,000 in the first seven months of the year.

The new orders measure increased to minus 5 from minus 8.1, the fourth straight contraction, today’s report showed.

The Philadelphia Fed’s index of prices paid jumped to 31.5, the highest level since May, from 9.8. The gauge of prices received increased to minus 9 from minus 13.9.

The overall Philadelphia Fed’s index isn’t composed of the individual measures, so some economists consider it a gauge of sentiment among manufacturers. A report from the New York Fed last week showed factory expansion accelerating this month, with measures of new orders and employment increasing.

Six Month Expectations

The gauge of business activity six months from now rose to 41 in October from 26.3. Measures of expected orders, employment, sales and capital spending all increased.

Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing during the month. That measure has shown factory growth is easing and October data will be released on Nov. 1.

Manufacturers make up 11 percent of the economy and had benefitted from expanding world trade, inventory restocking and stronger corporate spending for new equipment.

While economists project the boost from inventory replenishment has ended, businesses may still be updating equipment and software. Output of technology equipment, including computers and semiconductors, rose in September, according to the Fed’s industrial production report released Oct. 18.

‘Slow Recovery’

There is “slow recovery in a few areas,” General Electric Co.’s Chief Executive Officer Jeffrey Immelt said during a call with analysts last week after the world’s biggest producer of power-plant turbines reported third-quarter sales that missed analysts estimates. “The environment continues to get better.”

Foreign demand may help sustain growth. Exports rose 0.2 percent in August to the highest level in two years, Commerce Department figures showed last week. New York-based Alcoa Inc., the largest U.S. aluminum producer, earlier this month reported profit that beat analysts’ estimates and said sales abroad are climbing.

Sales at DuPont Co., the third-largest U.S. chemical maker will rise more than 15 percent this year amid strong demand for titanium dioxide pigment, farm products, electronics, solar- energy materials and car parts, executive vice president Jeffrey Keefer said at a conference Sept. 30. The company is based in Wilmington, Delaware.

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Manufacturing in the Philadelphia region expanded in October for the first time in three months as measures of employment and sales increased.The Federal Reserve Bank of Philadelphia s general economic index rose to 1.0 from minus 0.7 a month earlier. Readings greater than...
Thursday, 21 October 2010 10:35 AM
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