Manufacturing in New York Expanded at Slower Pace
General Electric Co. CEO Jeffrey Immelt
Matthew Staver/Bloomberg
General Electric Co. chief executive officer Jeffrey Immelt told the Montana Economic Development Summit this week the company is bolstering manufacturing in the U.S. as it invests across its businesses to profit from increased global demand.
General Electric Co. chief executive officer Jeffrey Immelt told the Montana Economic Development Summit this week the company is bolstering manufacturing in the U.S. as it invests across its businesses to profit from increased global demand. Photographer: Matthew Staver/Bloomberg
Sept. 15 (Bloomberg) -- Nouriel Roubini, professor at New York University, discusses the outlook for the U.S. economy and the possibility of a double-dip recession, which he puts at 40 percent. (This report is an excerpt of the full interview. Source: Bloomberg)
Manufacturing in the New York region expanded at a slower pace than forecast in September, signaling that factory managers remain concerned about a slowdown in U.S. economic growth.
The Federal Reserve Bank of New York’s general economic index fell to 4.1 this month, the lowest reading since July 2009, from 7.1 in August. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut. Measures of orders, sales and employment all improved, showing the drop in the index was mainly a reflection of a loss of confidence.
Growing economies in Asia and Latin America will keep spurring demand for U.S. factory goods as consumer purchases at home are slow to ramp up. Less inventory rebuilding may temper manufacturing, which led the economy out of the worst recession in seven decades.
“Output will continue to rise but not at the rate we’ve seen over the last six months,” Paul Dales, a U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “The regional surveys were overstating the gloom. We’re just going to have a period of more modest growth in output.”
Economists forecast the measure would rise to 8, according to the median of 50 estimates in a Bloomberg News survey. Projections ranged from 2 to 12.5. Manufacturers account for about 6 percent of New York’s economy.
Futures on the Standard & Poor’s 500 Index expiring in December extended losses after the report, declining 0.6 percent to 1,109.7 at 8:37 a.m. in New York.
Import Prices
A separate report from the Labor Department showed prices of goods imported into the U.S. rose more than forecast in August as crude oil and food costs jumped, masking contained inflation elsewhere.
The 0.6 percent increase in the import-price index followed a revised 0.1 percent rise in July. The August gain was twice the median estimate in a Bloomberg News survey. Prices excluding petroleum rose 0.2 percent, the first increase since May.
The New York Fed’s gauge of new factory orders increased to 4.3 from minus 2.7 in the prior month. A measure of shipments improved to minus 0.3 from minus 11.5.
The employment measure rose to 14.9, the highest level since May, from 14.3, and a gauge on the length of the average workweek also climbed.
Factory Payrolls
Factories nationally have added 145,000 workers to payrolls since the start of the year, according to Labor Department data. In August, they cut payrolls by 27,000, while the factory workweek increased to 41.2 hours from 41.1 hours a month earlier.
Today’s report showed an index of prices paid rose to 22.4 from 20 while prices received climbed to 1.5 from minus 2.9.
The factory executives’ future outlook dimmed to the lowest level since July 2009. The gauge measuring the outlook six months from now fell to 31.3 from 35.7.
Corning, New York-based Corning Inc. said it anticipates its total third-quarter glass volume will be down about 5 percent from the second quarter.
“The supply chain is in the midst of an inventory correction and that our third-quarter glass demand will be lower than what we originally expected,” Chief Financial Officer James Flaws told investors in San Francisco yesterday.
Fairfield, Connecticut-based General Electric Co. is bolstering manufacturing in the U.S. as it invests across its businesses to profit from increased global demand, Chief Executive Officer Jeffrey Immelt told the Montana Economic Development Summit this week.
‘Getting Better’
“When I look across the variety of GE’s businesses, we see the world getting better,” Immelt said, citing more airline passenger traffic, demand for credit, pricing in advertising and rail loads as evidence. “Fundamentally momentum is positive, and we see it across the board,” he said.
Since the beginning of 2009, GE has announced more than 16,000 retained or newly created U.S. jobs in its manufacturing divisions, including 3,500 temporary slots, according to the company. The company is moving some manufacturing of appliances back from China and Mexico because its U.S. workers are producing higher-quality products and are cost effective, Immelt said.
Manufacturers, which make up 11 percent of the U.S. economy, have benefitted from expanding world trade, inventory restocking and stronger corporate spending for new equipment. Recent reports suggest the need to rebuild inventories has faded.
“Manufacturing activity expanded further on balance, although the pace of growth appeared to be slower than earlier in the year,” the Fed said last week in its latest survey of 12 districts covering economic activity from mid-July through the end of August. It cited “widespread signs of a deceleration compared with preceding periods.”
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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