Manufacturing in U.S. Probably Grew in March on Equipment Demand

Photographer: Ariana Lindquist/Bloomberg

An employee trims a spring pad used on locomotives and freight cars to dampen vibrations at the Miller Felpax Corp. rail parts manufacturing facility in Winona, Minnesota. Close

An employee trims a spring pad used on locomotives and freight cars to dampen... Read More

Close
Open
Photographer: Ariana Lindquist/Bloomberg

An employee trims a spring pad used on locomotives and freight cars to dampen vibrations at the Miller Felpax Corp. rail parts manufacturing facility in Winona, Minnesota.

Manufacturing in the U.S. probably kept expanding in March as business investment and consumer spending improved, economists said before a report today.

A reading of 54 for the Institute for Supply Management’s factory index is the median forecast in a Bloomberg survey after the prior month’s 54.2, which was the highest since June 2011. A level greater than 50 signals growth. Construction spending rebounded in February, separate figures may show.

The economy is getting a bigger boost from production gains amid stronger capital spending, progress in the housing industry and resilient consumer demand. Further strides in manufacturing may depend on how companies respond to automatic cuts in federal spending that began last month.

“We’re seeing growth in housing plus the trickle-down into all the associated industries,” said Tom Simons, an economist at Jefferies LLC in New York. “Businesses aren’t overly concerned about the budget cuts,” though “there could be some months of weakness,” he said.

The Tempe, Arizona-based ISM’s figures are due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 51.6 to 55.

Also at 10 a.m., Commerce Department figures may show construction spending climbed 1 percent in February as near record-low mortgage rates spurred homebuilding, according to the Bloomberg survey median. Estimates ranged from no change to a 2 percent increase.

Photographer: Andrew Harrer/Bloomberg

An employee stacks hats after the brims has been flattened at the Bollman Hat Company in Adamstown, Pennsylvania. Close

An employee stacks hats after the brims has been flattened at the Bollman Hat Company... Read More

Close
Open
Photographer: Andrew Harrer/Bloomberg

An employee stacks hats after the brims has been flattened at the Bollman Hat Company in Adamstown, Pennsylvania.

Texas Instruments

Manufacturers projecting a better outlook include Texas Instruments Inc. (TXN) The largest maker of analog chips raised the lower end of its forecasts for first-quarter sales and profit.

“The stronger demand environment has continued,” Ron Slaymaker, vice president of the Dallas-based company, said on a March 7 conference call with analysts. “Quarter-to-date orders have been growing strongly.”

Manufacturing, which accounts for about 12 percent of the economy, has rebounded following a mid-2012 slowdown. Orders for durable goods jumped 5.7 percent in February, the most since September, after falling 3.8 percent the prior month, the Commerce Department said on March 26.

At the same time, regional reports offered a mixed picture for March. The Federal Reserve Bank of New York’s so-called Empire State gauge showed manufacturing in the region grew for a second month, and the Federal Reserve Bank of Philadelphia’s factory index indicated growth. The MNI Chicago Report’s business barometer fell to the lowest level of this year.

Photographer: Ty Wright/Bloomberg

Inmates make Ohio state flags in the Prison Industries building at the Ohio Reformatory for Women in Marysville, Ohio. Close

Inmates make Ohio state flags in the Prison Industries building at the Ohio Reformatory... Read More

Close
Open
Photographer: Ty Wright/Bloomberg

Inmates make Ohio state flags in the Prison Industries building at the Ohio Reformatory for Women in Marysville, Ohio.

Federal Spending

As part of the attempt to rein in the federal budget deficit, the government began across-the-board reductions in spending on March 1. About $85 billion of those will occur in this fiscal year.

Federal Reserve policy makers have said they’re concerned the fiscal restraint may impede the expansion’s progress. The economy cooled to a 0.4 percent annual rate in the final three months of 2012, after growing at a 3.1 percent pace in the third quarter.

Manufacturing shares are trailing the overall market. The Standard & Poor’s Supercomposite Machinery Index has advanced 6.1 percent this year, compared with a 10 percent jump in the broader S&P 500 measure.

United Technologies Corp. (UTX), the maker of Pratt & Whitney jet engines and Otis elevators, is among businesses projecting economic growth will improve.

“The U.S. economy is better and it is going to continue to get better,” Gregory Hayes, chief financial officer of the Hartford, Connecticut-based company, said at a March 14 analyst meeting. “We’ve got another year-and-a-half or so probably of low interest-rate environment, which we could hope to capitalize on.”

Consumer spending climbed in February by the most in five months, even in the face of a two percentage-point increase in the payroll tax. Growth in hiring is one reason for the pickup.

                      Bloomberg Survey

================================================================
                         Construct      ISM      ISM
                          Spending     Manu   Prices
                              MOM%    Index    Index
================================================================

Date of Release              04/01    04/01    04/01
Observation Period            Feb.    March    March
----------------------------------------------------------------
Median                        1.0%     54.0     60.0
Average                       1.0%     54.1     60.1
High Forecast                 2.0%     55.0     62.8
Low Forecast                  0.0%     51.6     58.0
Number of Participants          34       59       15
Previous                     -2.1%     54.2     61.5
----------------------------------------------------------------
4CAST Ltd.                    ---      53.5     ---
ABN Amro Inc.                 ---      54.0     ---
Action Economics              2.0%     53.5     59.0
Ameriprise Financial Inc      0.8%     54.0     59.0
Banca Aletti & C spa          ---      54.6     62.0
Bantleon Bank AG              ---      54.2     ---
BMO Capital Markets           1.2%     54.2     60.0
BNP Paribas                   1.5%     53.7     59.5
BofA Merrill Lynch Resear     1.2%     54.0     ---
Briefing.com                  0.4%     54.5     ---
Capital Economics             0.5%     54.0     ---
CIBC World Markets            ---      54.8     ---
Citi                          0.6%     54.0     58.0
ClearView Economics           1.7%     54.5     62.0
Commerzbank AG                ---      54.0     ---
Credit Agricole CIB           ---      54.5     ---
Credit Suisse                 ---      53.5     59.0
Daiwa Securities America      1.0%     54.0     61.0
Danske Bank A/S               ---      54.2     ---
DekaBank                      1.0%     54.5     ---
Desjardins Group              1.5%     54.7     ---
Deutsche Bank Securities      1.0%     55.0     ---
Deutsche Postbank AG          ---      54.5     ---
First Trust Advisors          1.0%     53.6     ---
FTN Financial                 ---      54.3     ---
Goldman, Sachs & Co.          1.6%     53.0     ---
HSBC Markets                  ---      53.6     ---
Hugh Johnson Advisors         ---      53.5     ---
IDEAglobal                    0.5%     55.0     60.0
IHS Global Insight            0.0%     54.5     ---
ING Financial Markets         1.3%     54.0     59.5
Intesa Sanpaolo               1.0%     53.6     ---
J.P. Morgan Chase             1.0%     54.0     ---
Janney Montgomery Scott L     ---      51.6     ---
Jefferies LLC                 0.7%     53.8     ---
Lloyds Tsb Bank Plc           1.0%     54.4     59.5
Maria Fiorini Ramirez Inc     ---      54.0     ---
MET Capital Advisors          ---      53.7     ---
Modal Asset                   ---      52.5     ---
Moody’s Analytics             0.9%     54.8     ---
National Bank Financial       ---      53.8     ---
Nomura Securities Intl.       ---      54.1     ---
Nord/LB                       0.7%     53.7     60.0
OSK Group/DMG                 ---      54.5     ---
Pierpont Securities LLC       ---      53.9     ---
PNC Bank                      1.0%     53.5     ---
Raiffeisenbank Internatio     ---      53.7     ---
Raymond James                 0.5%     53.9     ---
RBC Capital Markets           ---      54.5     ---
RBS Securities Inc.           ---      54.0     ---
Renaissance Macro Researc     1.0%     53.5     ---
Scotiabank                    0.9%     55.0     ---
Societe Generale              0.8%     55.0     62.8
Stone & McCarthy Research     ---      54.5     ---
TD Securities                 1.0%     54.3     ---
University of Maryland        2.0%     53.5     60.0
Wells Fargo & Co.             0.9%     54.5     ---
Westpac Banking Co.           0.7%     55.0     ---
Wrightson ICAP                0.9%     54.0     ---
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.