Manufacturing in U.S. Probably Grew for 16th Month

Manufacturing in the U.S. probably expanded for a 16th consecutive month in November, a sign the world’s largest economy is gaining traction as the year draws to a close, economists said before reports today.

A reading of 56.5 is projected for the Institute for Supply Management’s factory index, little changed from the five-month high of 56.9 in October, according to the median estimate of 82 economists surveyed by Bloomberg News. Readings greater than 50 signal growth. Other reports may show construction spending fell and company payrolls increased.

Manufacturers such as Dow Chemical Co. remain at the forefront of the expansion as growing demand abroad fuels exports and companies invest in new equipment. Holiday sales gains indicate factories stand to benefit further from a pickup in consumer spending that would allow the recovery to become more broad-based.

“The economy seems to be regaining some momentum,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “Inventories are still in pretty good shape, so any gains at the consumer level should translate into improving activity at the manufacturing level.”

The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 54 to 58.1.

Manufacturing in Europe

In Europe, manufacturing expanded at the fastest pace in four months in November, led by Germany, the region’s largest economy. A gauge of manufacturing in the 16-nation euro area rose to 55.3 from 54.6 the prior month, London-based Markit Economics said today.

China’s manufacturing grew at a faster pace for a fourth straight month in November. The Purchasing Managers’ Index rose to 55.2 from 54.7, China’s logistics federation said on its website today.

While U.S. manufacturing grows, a slump in home sales following the expiration of a buyer tax incentive is depressing construction. Spending on all projects dropped 0.3 percent in October, the third decline in four months, according to the median estimate of economists surveyed before the Commerce Department’s figures at 10 a.m.

Another report today may show U.S. companies last month added the most jobs since the recession began in December 2007. Employment rose by 70,000 in November, ADP Employer Services will report at 8:15 a.m., according to the median estimate of economists surveyed by Bloomberg.

Obama and CEOs

As part of an effort to reach out to some of the nation’s largest employers, President Barack Obama met with Wal-Mart Stores Inc. Chief Executive Officer Mike Duke at the White House on Nov. 29. The meeting is one of a series of sessions aimed at soliciting the views of companies, with the goal of spurring the recovery and adding jobs.

Dow Chemical Co., the world’s second-biggest chemical company, said yesterday that fourth-quarter sales are matching those of the prior three months, led by demand for materials used in electronics.

Electronics demand is “going gangbusters,” and commodity plastics and chemical sales are still “strong,” Bill Weideman, chief financial officer of the Midland, Michigan-based company, said in an investor presentation broadcast on the Internet. “Overall demand is very solid.”

GM Hiring

General Motors Co. is among those companies boosting production and hiring. The maker of the Chevrolet Volt gasoline- electric car plans to add 1,000 engineers in Michigan to help expand the automaker’s lineup of electric-drive vehicles. The hiring will increase GM’s workforce of electric-vehicle engineers by 50 percent to about 3,000, said Rob Peterson, a spokesman for the Detroit company.

Shares of manufacturers have increased more this year than the broader indexes. The Standard & Poor’s Supercomposite Industrial Machinery Index has climbed 34 percent through yesterday, while the S&P 500 has gained 5.9 percent.

Most gauges of regional manufacturing improved last month, including a Federal Reserve Bank of Philadelphia survey that showed factories in the area expanded at the fastest pace this year. The Institute for Supply Management-Chicago Inc. said yesterday that its business barometer rose last month to the highest level since April.

Auto Sales

Automakers including Ford Motor Co. and GM are among manufacturers seeing increased demand. Ford’s sales in October rose 15 percent from a year earlier to 157,935, the Dearborn, Michigan-based company said in a statement. Sales at GM climbed 3.5 percent to 183,759.

The world’s largest economy grew at a 2.5 percent annual pace from July through September, more than previously calculated, as Americans boosted their spending, the Commerce Department said last week. Consumer purchases, which account for 70 percent of the economy, rose at a 2.8 percent rate, the most since the final three months of 2006.

Holiday sales are stronger as well. The average shopper in the U.S. spent $365.34, or 6.4 percent more, over Thanksgiving weekend than last year as more people picked up jewelry and toys, the National Retail Federation said Nov. 28. Retailers lured people into stores with promotions like Wal-Mart Stores Inc.’s $5 Barbie and J.C. Penney Co.’s $10 diamond-accented earrings.

                    Bloomberg Survey

================================================================
                             Prod-    Labor      ISM  Construct
                          uctivity    Costs     Manu  Spending
                              QOQ%     QOQ%    Index     MOM%
================================================================

Date of Release              12/01    12/01    12/01    12/01
Observation Period              3Q     3Q       Nov.     Oct.
----------------------------------------------------------------
Median                        2.3%    -0.2%     56.5    -0.3%
Average                       2.4%    -0.3%     56.3    -0.3%
High Forecast                 2.8%     0.3%     58.1     1.2%
Low Forecast                  1.9%    -0.9%     54.0    -1.0%
Number of Participants          66       58       82       53
Previous                      1.9%    -0.1%     56.9     0.5%
----------------------------------------------------------------
4CAST Ltd.                    2.5%    -0.6%     55.0    -0.2%
ABN Amro Inc.                 2.4%     ---      56.5     ---
Action Economics              2.4%     0.1%     56.0    -0.4%
Aletti Gestielle SGR          2.4%     ---      56.0     ---
Ameriprise Financial          2.3%    -0.2%     58.0     0.0%
Banesto                       2.2%     ---      56.0    -0.3%
Bank of Tokyo- Mitsubishi     2.7%    -0.5%     56.0    -0.2%
Bantleon Bank AG              2.3%    -0.1%     57.5     ---
Barclays Capital              2.5%    -0.8%     57.0     0.0%
Bayerische Landesbank         ---      ---      56.0     ---
BBVA                          2.5%    -0.3%     56.0    -0.3%
BMO Capital Markets           2.3%    -0.2%     57.0    -0.4%
BNP Paribas                   2.6%    -0.8%     56.5    -0.4%
BofA Merrill Lynch Research   2.2%     0.3%     56.5    -0.4%
Briefing.com                  2.2%    -0.4%     57.2    -0.8%
Capital Economics             2.3%    -0.2%     56.5     0.5%
CIBC World Markets            2.2%     ---      56.5     ---
Citi                          2.6%    -0.2%     54.0     0.2%
ClearView Economics           2.3%    -0.3%     55.5    -0.5%
Commerzbank AG                ---      ---      56.0     ---
Credit Agricole CIB           2.2%    -0.2%     56.9     ---
Credit Suisse                 2.4%     0.0%     57.5     ---
Daiwa Securities America      2.5%     0.0%     57.0    -0.5%
Danske Bank                   ---      ---      56.2     ---
DekaBank                      2.3%     0.2%     55.5     0.0%
Desjardins Group              2.6%    -0.8%     55.0    -0.5%
Deutsche Bank Securities      2.6%    -0.1%     56.0     0.3%
Deutsche Postbank AG          ---      ---      56.5     ---
DZ Bank                       2.2%    -0.3%     55.0     ---
Exane                         2.3%     0.0%     55.5    -0.4%
First Trust Advisors          1.9%     0.0%     56.6     0.4%
FTN Financial                 2.1%    -0.1%     57.5     ---
Goldman, Sachs & Co.          2.6%    -0.1%     57.0     1.2%
Helaba                        ---      ---      55.5     ---
High Frequency Economics      2.6%    -0.8%     56.9     0.0%
Horizon Investments           2.2%    -0.2%     57.0    -0.2%
HSBC Markets                  2.6%     ---      55.0    -0.1%
Hugh Johnson Advisors         ---      ---      55.5     ---
IDEAglobal                    2.1%    -0.3%     57.0    -0.4%
IHS Global Insight            1.9%     0.0%     58.0     0.0%
Informa Global Markets        2.3%    -0.3%     55.9    -1.0%
ING Financial Markets         2.3%    -0.3%     56.5    -0.5%
Insight Economics             2.4%    -0.5%     57.0    -0.8%
Intesa-SanPaulo               2.2%     0.1%     56.5    -0.4%
J.P. Morgan Chase             2.6%     0.0%     56.5    -0.1%
Janney Montgomery Scott       2.4%    -0.3%     55.7     0.3%
Jefferies & Co.               2.1%    -0.1%     56.5    -0.5%
Landesbank Berlin             ---      ---      54.5    -0.3%
Landesbank BW                 ---      ---      55.5     ---
Maria Fiorini Ramirez         2.3%    -0.3%     56.7     ---
MF Global                     2.2%     0.0%     57.0    -0.3%
MFC Global Investment         2.2%    -0.3%     55.0    -0.5%
Mizuho Securities             2.2%    -0.2%     56.4     0.0%
Moody’s Analytics             2.6%    -0.5%     55.7     0.2%
Morgan Keegan & Co.           ---      ---      ---      0.3%
Morgan Stanley & Co.          2.6%    -0.2%     56.9    -0.2%
National Bank Financial       ---      ---      55.5     ---
Natixis                       ---      ---      56.6     ---
Newedge                       ---      ---      56.7     ---
Nomura Securities Intl.       2.4%    -0.9%     55.5     ---
Nord/LB                       2.3%    -0.2%     56.5     ---
Pierpont Securities LLC       2.6%    -0.1%     56.5     ---
PineBridge Investments        2.8%     ---      57.0    -0.6%
PNC Bank                      2.4%    -0.5%     57.2    -0.5%
Raiffeisen Zentralbank        2.3%    -0.5%     54.0     ---
Raymond James                 2.3%    -0.5%     56.4    -0.4%
RBC Capital Markets           ---      ---      56.0     ---
RBS Securities Inc.           2.5%    -0.2%     57.0     ---
Scotia Capital                ---      ---      57.2     ---
Societe Generale              2.6%     0.0%     58.0    -0.2%
Standard Chartered            ---      ---      55.5     ---
State Street Global Markets   2.4%     0.0%     57.4    -0.3%
Stone & McCarthy Research     2.6%    -0.8%     55.5    -0.2%
TD Securities                 2.0%     ---      55.5    -0.2%
Thomson Reuters/IFR           2.5%    -0.1%     57.5     ---
UBS                           1.9%    -0.1%     58.0    -0.5%
UniCredit Research            ---      ---      55.0     ---
Union Investment              ---      ---      56.0     ---
University of Maryland        2.4%    -0.6%     56.0    -0.4%
Wells Fargo & Co.             2.1%    -0.2%     58.1    -0.6%
WestLB AG                     2.2%    -0.2%     56.0    -0.5%
Westpac Banking Co.           2.4%     ---      57.0    -0.8%
Wrightson ICAP                2.3%    -0.4%     57.0    -0.9%
================================================================

To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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