Manufacturing in the New York region expanded more than forecast in May as shipments surged and new orders improved.
The Federal Reserve Bank of New York’s general economic index increased to 17.1 this month from 6.6 in April. The median estimate in a survey of Bloomberg economists called for an increase to 9. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October.
Manufacturers in the U.S. are getting a boost as auto sales running at the fastest pace in four years lift demand for goods from glass and machinery to sound systems. The gain in the index is a sign that other manufacturing gauges may show improvement, said Millan Mulraine, a senior U.S. strategist at TD Securities in New York.
“The story is one of moving back towards trend not only in manufacturing but in the overall economy as well,” Mulraine said.
Other reports today showed that retail sales rose in April at the slowest pace of the year as unseasonably mild pulled consumers to stores the prior month, and consumer prices were unchanged.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,339.56 at 9:39 a.m. in New York. Treasuries pared losses after Greek leaders meeting in Athens indicated that talks to form a government had failed and elections will be held, boosting demand for safe assets.
Estimates for the Empire State Index in the Bloomberg survey of 57 economists ranged from 2 to 19.9.
The Empire State gauge of new orders rose to 8.3 in May from 6.5 the month before, while the shipments measure jumped to 24.1 from 6.4.
The index of factory employment climbed to 20.5 in May from 19.3.
The index of prices paid decreased to 37.4 from 45.8 in April. A measure of the factory workweek rose to 12.1 from 6.
Factory executives in the New York Fed’s district were less optimistic about the future. A measure of the outlook six months from now fell in May to 29.3 from 43.1 the month earlier.
Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management’s report on U.S. manufacturing. The Philadelphia Fed’s gauge, to be released May 17, probably climbed to 10 in May from 8.5 in April, according to the median estimate in a Bloomberg survey of economists. ISM factory data will be released June 1.
Manufacturing makes up 12 percent of the U.S. economy and about 6 percent of the New York’s. Harman International Industries Inc., a maker of car-audio systems based in Stamford, Connecticut, got a record $2 billion contract in April from a luxury European automaker whose name it didn’t disclose.
“Clearly, there is some softness in Europe and that detracted from our growth in the first quarter,” Chief Financial Officer Timothy Fitzgerald said in a May 11 earnings call. “But in the kind of the rest of the world, Latin America, Asia, Middle East, we’re still seeing strength.”
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