Factories in New York Area Grow at Slower Pace Than ForecastJeanna Smialek
Manufacturing in the New York region expanded less than projected in April as orders cooled and sales stagnated.
The Federal Reserve Bank of New York’s general economic index dropped to 3.1 this month from 9.2 in March. Readings exceeding zero signal expansion in New York, northern New Jersey and southern Connecticut. The median projection of 47 economists surveyed by Bloomberg was 7.
Manufacturing, which accounts for about 12 percent of the economy, may be starting to cool as companies limit the pace of inventory building and overseas economies struggle to improve. At the same time, sustained strength in the auto industry and housing’s rebound will help keep factories from floundering.
“We were looking for a little bit of slowing going into the second quarter, and that’s pretty much what we got,” said Gennadiy Goldberg, a U.S. strategist at TD Securities Inc. in New York, who projected a reading of 3 for the index. Still, “the U.S. is in a pretty good position in terms of where the economy is compared with the rest of the world.”
Estimates in the Bloomberg survey ranged from zero to 14. Economists monitor the New York report and Philadelphia Fed factory readings, due April 18, for clues about the Institute for Supply Management figures on U.S. manufacturing. That report is set for release on May 1.
Stock-index futures held losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June falling 0.4 percent to 1,576 at 8:56 a.m. in New York.
Factory executives in the New York Fed region were less optimistic about future activity. The gauge measuring the outlook six months from now fell to 32 from 36.4 in March, which was the highest reading in 11 months.
The gauge of current new orders dropped to 2.2 in April from 8.2. A measure of shipments fell to 0.8 from 7.8 a month earlier.
The index of prices paid rose to 28.4, the highest since May, from 25.8 in March, while prices received rose to 5.7 from 2.2.
The gauge for factory employment climbed to 6.8 from 3.2. A report from the Labor Department on April 5 showed payrolls at the nation’s manufacturers fell 3,000 in March, the first decline in six months.
Sustained strength in the auto industry has helped support manufacturing. Cars and light trucks sold at a 15.2 million annual pace in March, capping the strongest three months for purchases since early 2008, according to data from Ward’s Automotive Group.
At General Motors Co., the world’s second-largest automaker, sales have been improving as the housing market recovers and fuels truck-buying and pent-up demand drives consumers to dealerships.
“We continue to see slow and steady growth,” Kurt McNeil, vice president for U.S. sales and service at GM, said on an April 2 conference call. “So we have the ability to ebb and flow production on an as-needed basis, maintaining, certainly doing it in an efficient manner.”
Still, a report last week showed consumer spending eased at the end of the first quarter. Retail sales fell 0.4 percent in March, the biggest setback since June, after a 1 percent jump a month earlier. Consumer sentiment also took a hit this month after employment cooled, figures from Thomson Reuters/University of Michigan showed.