Manufacturing in the Philadelphia region expanded in August for the third straight month, 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 fell to 9.3 this month from a reading of 19.8 in July that was the highest since March 2011. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.
Factories are reaping the benefits of sustained gains in construction, auto sales and consumer demand. Stronger household balance sheets and improvements in overseas markets such as Europe might further boost manufacturing, which accounts for about 12 percent of the economy.
“The manufacturing sector is healthy, it’s chugging along,” Josh Dennerlein, an economist with Bank of America Corp. in New York, said before the report. “It’s not super-strong growth, but it’s not contracting. It’s modest.”
The median forecast of 54 economists surveyed by Bloomberg called for a reading of 15. Estimates ranged from 7 to 23.
A similar report from the Federal Reserve bank of New York today showed manufacturing in that region expanded in August for a third month. The so-called Empire State index fell to 8.2 from 9.5 in July. Readings greater than zero signal expansion in New York, northern New Jersey and southern Connecticut.
Other reports today showed jobless claims last week dropped to the lowest level in almost six years, consumer confidence cooled last week from its highest level in more than five years, consumer prices rose in July for a third month, manufacturing production declined last month and homebuilder sentiment jumped in August to the highest level since 2005.
Stocks dropped today as the reports fueled speculation the Federal Reserve will trim monthly asset purchases this year. The Standard & Poor’s 500 Index declined 1.5 percent to 1,660.37 at 10:17 a.m. in New York.
The Philadelphia Fed’s new orders measure declined to 5.3 from 10.2 July. Shipments contracted for the first time in three months. A gauge of employment fell to 3.5 this month from a one-year high of 7.7 in July.
Philadelphia-area manufacturers were less optimistic about the future, today’s report showed. The outlook index for six months from now declined to 38.9 from a two-year high of 44.9 last month.
Economists monitor Philadelphia and Empire State factory reports for clues about the Institute for Supply Management national figures on manufacturing. The next ISM report is due Sept. 3.