Tags: Philly | Fed | Factory | Activity | High

Philly Fed Factory Activity Hits High for Year

Thursday, 18 November 2010 10:18 AM

Manufacturing in the Philadelphia region expanded in November at the fastest pace this year as orders, sales and employment surged, indicating U.S. and overseas demand will keep fueling factory growth.

The Federal Reserve Bank of Philadelphia’s general economic index jumped to 22.5, exceeding the most optimistic forecast in a Bloomberg News survey, from 1 a month earlier. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

The figures contrast with a report earlier this week showing New York-area manufacturing contracted in November for the first time in more than a year. Exports to faster-growing economies such as China and corporate purchases of new equipment are bolstering U.S. manufacturing, which led the economy out of the worst recession since the 1930s.

“Manufacturing is still flexing its muscle and doing what it can to help the economy,” Jennifer Lee, an economist at BMO Capital Markets in Toronto, said before the report. “Exports are playing a part in manufacturing growth, and companies are putting money into technology to boost productivity.”

The gauge was forecast to increase to 5, according to the median estimate in the Bloomberg survey. Estimates of the 60 economists surveyed ranged from minus 5 to positive 12.

Another report from the Labor Department today showed fewer Americans than forecast filed claims for jobless benefits last week, a sign the labor market is starting to improve. Applications for unemployment insurance rose by 2,000 to 439,000 in the week ended Nov. 13.

New Orders, Shipments

The Philadelphia Fed bank’s new orders measure rose to 10.4, the highest level since April, from minus 5 in October. The shipments gauge increased to 16.8 in November, the highest since February, from 1.4 the prior month.

The employment index jumped to 13.3 this month, the highest since August 2007, from 2.4.

The index of prices paid rose to 34 from 31.5 the prior month, while its gauge of prices received increased to minus 2.1 from minus 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. The New York Fed’s factory measure, known as the Empire State Index, fell a record 26.9 points to minus 11.1 in November.

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.

U.S. Manufacturing

The institute will release its report on nationwide manufacturing for November on Dec. 1. The measure reached a five-month high of 56.9 in October.

Manufacturing makes up about 11 percent of the economy and is getting a boost from expanding world trade. Exports rose 0.3 percent in September to the highest level in two years, Commerce Department data showed on Nov. 10.

Newell Rubbermaid Inc., which makes and markets a range of products including housewares and tools, is among companies benefiting from sales in developing markets while demand at home remains weak.

“I wish we were getting a little more help from the economies of North America and western Europe,” Mark Ketchum, chief executive officer, said on an Oct. 29 teleconference on the Atlanta-based company’s third-quarter earnings. “We’re seeing particular strength in the faster growing emerging markets of Asia, Latin America and eastern Europe.”

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Manufacturing in the Philadelphia region expanded in November at the fastest pace this year as orders, sales and employment surged, indicating U.S. and overseas demand will keep fueling factory growth.The Federal Reserve Bank of Philadelphia s general economic index jumped...
Thursday, 18 November 2010 10:18 AM
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