Factories in Philadelphia Area Expand at Faster PaceAlex Kowalski
Manufacturing in the Philadelphia region expanded in February at the fastest pace in seven years, underscoring factories’ contribution to the economic expansion.
The Federal Reserve Bank of Philadelphia’s general economic index rose to 35.9, the highest level since January 2004 and exceeding the median forecast of 21 in a Bloomberg News survey of economists. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Demand for new equipment and more exports is supporting manufacturers like Dell Inc. and Parker Hannifin Corp. Increased consumer spending, the largest part of the economy, could lead to faster job growth as factories continue to expand.
“We’re still looking for activity to be strong definitely throughout the first half of the year,” said David Semmens, an economist at Standard Chartered Bank. “There is an increase in demand for labor, both in the number of employees and the average working week, which means people are going to have more money in their pockets.”
Estimates for the manufacturing gauge in the Bloomberg survey of 56 economists ranged from 15 to 25.
The similar report from the New York Fed this week showed manufacturing in that region sped up in February. The bank’s general economic index rose to 15.4 from 11.9 in January.
Other reports today showed more Americans filed applications for unemployment insurance payments last week, rising food and fuel costs drove up the cost of living last month and consumer comfort held last week near a two-month low.
The number of claims for jobless benefits increased to 410,000 from 385,000 the prior week, figures from the Labor Department showed. Consumer prices rose 0.4 percent in January, according to other Labor Department data. Excluding food and fuel, the so-called core gauge rose 0.2 percent from the prior month, the most since October 2009.
Also today, the Bloomberg Consumer Comfort Index, formerly the ABC News US Weekly Consumer Comfort Index, climbed to minus 43.4 in the period to Feb. 13 compared with minus 46 the prior week. Twenty-nine percent of those surveyed said the economy will worsen, the most since November and up from 23 percent in early January.
Stocks fell after the reports. The Standard & Poor’s 500 Index decreased 0.1 percent to 1,334.84 at 10:34 a.m. in New York. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.55 percent from 3.62 percent late yesterday.
Production at U.S. factories climbed in January for a fifth consecutive month, Fed figures showed yesterday. Manufacturing output increased 0.3 percent after a revised 0.9 percent jump in December that was more than twice as large as previously reported.
The employment index in the Philadelphia Fed report climbed to 23.6, the highest level since April 1973, from a reading last month of 17.6. A measure of the average workweek rose to 12.8 in February from 10.6.
The Philadelphia Fed’s new orders measure rose to 23.7, the highest level since Sept. 2004, from 23.6 in January. The shipments gauge jumped to 35.2 from 13.4 last month.
The index of prices paid increased to 67.2 from 54.3 the prior month, while the measure of prices received advanced to 21 from 17.1.
Individual measures in the index don’t contribute to the headline reading, so some economists consider it a gauge of sentiment among manufacturers.
Economists monitor Philadelphia and New York Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing during the month. The ISM will release its report on March 1.
Overseas demand for American goods is helping support U.S. manufacturing, which makes up about 11 percent of the economy. Exports rose 1.8 percent in December to the highest level since July 2008, according to Commerce Department data released Feb. 11. For all of last year, exports increased 17 percent, the biggest one-year gain since 1988.
“We continue to see strong demand globally across many of our businesses,” Nicholas Fanandakis, chief financial officer at DuPont Co., the third-biggest U.S. chemical maker, said Jan. 25 during a conference call with analysts.
DuPont posted fourth-quarter earnings that beat analysts’ estimates as paint-pigment and solar-materials jumped and taxes plunged. The Wilmington, Delaware-based company raised its 2011 profit forecast for this year.
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