Manufacturing in New York Region Grew at a Faster Pace
Manufacturing in the New York region expanded in July at a faster pace than anticipated, signaling factories will keep contributing to growth.
The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0. Readings greater than zero signal expansion in the so- called Empire State Index that covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October.
The figures may ease concern that factory production, which was bolstering the world’s largest economy, is faltering. At the same time, softening demand from Europe to China will likely weigh on exports of American-made goods and decelerating U.S. consumer spending may curb orders.
“The fact that manufacturing is still growing is good news,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, who projected a rise in the Empire index. “Any improvement, especially right now, should be welcomed. The sector is still contributing to economic growth.”
In a separate report, the Commerce Department said retail sales in the U.S. declined for a third straight month in June. The 0.5 percent drop followed a 0.2 percent decrease in May.
Stock-index futures maintained losses after the reports, with the contract on the Standard & Poor’s 500 Index expiring in September dropping 0.3 percent to 1,348.1 at 8:34 a.m. in New York.
The Bloomberg survey estimates for the Empire State Index ranged from 9.3 to minus 8.0.
The Empire State gauge of new orders decreased to minus 2.7 this month from 2.2 the prior month. A measure of shipments rose to 10.3 from 4.8.
The employment measure rose to 18.5, from 12.4 in June. The index of prices paid fell to 7.4 from 19.6.
Factory executives in the New York Fed’s district were less optimistic about the future. The gauge measuring the outlook six months from now fell to 20.2 from 23.1.
Manufacturing makes up about 12 percent of the U.S. economy and about 6 percent of New York’s.
China’s growth slowed for a sixth quarter, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound. The nation’s gross domestic product expanded 7.6 percent in the second quarter from a year ago, the weakest in three years.
Concerns about Europe’s debt crisis persist. Spanish lenders’ net borrowings from the European Central Bank rose to a record 337 billion euros ($411 billion) in June as the European bailout agreement failed to ease their access to funding.
Harley-Davidson Inc. (HOG), the biggest U.S. motorcycle maker, is among companies hurt by slowing global demand and a pickup in the value of the dollar against the euro, which makes U.S.-made goods less attractive to overseas buyers.
“There is an impact with regards to the events and the debt crisis and consumer confidence and potential recessionary pressures in Europe on our business there,” John Olin, chief financial officer, said on a June 26 conference call. “We are seeing the pressures of a devaluing currency” as “ everything that we send to Europe is made here” in the U.S., he said.
Economists monitor the New York report and Philadelphia Fed factory readings, due on July 19, for clues about the Institute for Supply Management figures on U.S. manufacturing during the month.
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