Manufacturing in the Philadelphia region expanded in September at the fastest pace since March 2011, a sign factories are picking up momentum.
The Federal Reserve Bank of Philadelphia’s general economic index jumped to 22.3 this month from 9.3 in August. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware. Measures of orders, sales and factory employment increased at faster rates in September, while a gauge of the six-month outlook was the strongest in a decade.
Factories are benefitting as auto sales and consumer demand for home-related goods gain. Stronger household balance sheets as house and equity prices rise, combined with improvement in overseas markets, may provide a further boost for manufacturing, which accounts for about 12 percent of the economy.
“Subtle improvement in the global economy should be lifting manufacturer’s spirit a little in September,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The regional surveys all signal an improvement in manufacturing.”
The median forecast of 57 economists surveyed by Bloomberg called for a reading of 10.3. Estimates ranged from 5 to 16.6.
Another report today jobless claims rose less than forecast last week as two states began working through a backlog of applications that were caused by computer-system changeovers. Filings for unemployment benefits climbed by 15,000 to 309,000 in the week ended Sept. 14 from a revised 294,000 in the prior period, the Labor Department said.
A report from the Federal Reserve Bank of New York on Sept. 16 showed manufacturing in that region expanded in September for a fourth month. The so-called Empire State index eased to 6.3 after rising to 8.2 in August. Readings greater than zero signal growth in New York, northern New Jersey and southern Connecticut.
The Philadelphia Fed’s new orders measure increased to 21.2, also the highest since March 2011, from 5.3 in August. An index of shipments jumped to 21.2 in September from minus 0.9 a month earlier. A gauge of employment rose to 10.3 this month from 3.5 in August.
Philadelphia-area manufacturers were more optimistic about the future, today’s report showed. The outlook index for six months from now increased to 58.2, the strongest since September 2003, from a 38.9 last month.
PPG Industries Inc., a Pittsburgh-based company that makes glass products, coatings and chemicals, is among companies benefitting from a recent bounce-back in manufacturing.
“In the U.S. market, things have begun to turn, so you’re seeing now, from a steep decline in 2009, steady improvement in the U.S. and Canada in volumes,” chief executive officer Charles E. Bunch said in a Sept. 17 presentation. “We have been able to set new regional records in terms of segment earnings for our coatings business.”
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 Oct. 1.