Manufacturing (OUTFGAF) in the Philadelphia region expanded more than forecast in July, the latest sign of an improving outlook for the industry after a slowdown earlier this year.
The Federal Reserve Bank of Philadelphia’s general economic index increased to 19.8, the highest level since March 2011, from 12.5 the prior month. Readings greater than zero signal expansion in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 57 economists surveyed by Bloomberg called for a reading of 8.
The data follows figures this week that showed production climbed in the U.S. last month while manufacturing in the New York area expanded in July at the fastest pace in five months. Domestic demand is being bolstered by a pickup in automobile sales and a boost in capital spending as companies look past sequestration and global growth risks.
“Manufacturing may have gone through a little bit of a soft patch, but it seems to be coming back,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, said in an interview before the report. “The trend here is positive.”
Estimates in the Bloomberg survey ranged from minus 2 to 17.5.
The Philadelphia Fed’s shipments gauged climbed to 14.3 in July, the highest this year, from 4.1. A gauge of employment rose to 7.7, the strongest since April 2012, from minus 5.4 in June.
New orders advanced at a slower pace this month with the index declining to 10.2 from 16.6 in June, which was the highest in more than two years.
Philadelphia-area manufacturers grew more optimistic about the future, today’s report showed. The outlook index for six months from now rose to 44.9, the highest level since March 2011, from 33.7 in June.
Economists monitor Philadelphia and Empire State factory reports for clues about the Institute for Supply Management national figures on manufacturing, which makes about 12 percent of the economy. The next ISM report is due Aug. 1.
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