BL: Manufacturing in New York Region Slows More Than Estimated as Sales Cool
By Courtney Schlisserman
May 17 (Bloomberg) -- Manufacturing in the New York region expanded in May at a slower pace than forecast as sales cooled.
The Federal Reserve Bank of New York’s general economic index fell to 19.1 from 31.9 in April, which was the second- highest level in four years. Readings greater than zero signal gains in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
Today’s report indicates manufacturing is settling into a more sustainable pace of growth after helping pull the economy from the worst recession since the 1930s. Area factories boosted payrolls this month at the fastest pace in six years, showing they will probably keep expanding as consumer purchases strengthen, businesses rebuild inventories and exports pick up.
“There’s no sign of weakening for the moment,” James O’Sullivan, global chief economist at MF Global Ltd. in New York, said before the report. “We’ve seen solid growth in consumer spending as well as capital expenditures and on top of that we’ve seen some booming exports.”
Economists forecast the New York Fed’s index would decrease to 30, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 25 to 34. Manufacturers account for about 6 percent of New York’s economy.
The New York Fed’s gauge of new factory orders decreased to 14.3 this month from 29.5 in April. A measure of shipments dropped to 11.3 from 32.1.
More Jobs
The employment measure climbed to 22.4, the highest level since May 2004, from 20.3 in April. Factories nationally have added 101,000 workers to payrolls since the beginning of the year, according to Labor Department data.
Today’s report showed an index of prices paid advanced to 44.7, the highest level since September 2008, this month from 41.8, while prices received decreased to 5.3 from 6.3.
Factory executives in the New York Fed’s district were less optimistic about the future. The gauge measuring the outlook six months from now decreased to 42.1 from 55.7 in April.
A Fed report last week showed industrial production rose 0.8 percent in April. Another April measure, the Institute for Supply Management’s factory gauge, jumped to the highest level in almost six years, according to data released May 3.
Economists surveyed by Bloomberg News project the Philadelphia Fed’s general economic index, to be released May 20, climbed to 21.5 from 20.2 in April. Readings above zero for that measure also signal expansion.
Spending Picks Up
The biggest jump in consumer spending in three years and a 13 percent rise in business investment in new equipment helped the economy expand for a third straight quarter in the first three months of this year. Manufacturers make up 12 percent of the economy and are benefitting from the gains in spending and expanding global economies.
A pickup in consumer spending helped Corning Inc., the world’s largest maker of glass for flat-panel televisions, report a 57 percent jump in sales for the first quarter compared with the same time last year. Exports also were a boon for the Corning, New York-based company.
“The economy is getting a little better,” Senior Vice President Tony Tripeny said in an interview April 28. “A lot of people are out there buying TVs, especially in China and Japan. Both notebooks and monitors sold better than we expected, partly due to businesses and the developing world.”
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
Last Updated: May 17, 2010 08:30 EDT
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