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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 [e-mail]

Last Updated: May 17, 2010 08:30 EDT

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UAUA puts? Ash Cloud Halts 1,000 Flights Across Northwest Europe (Update1)

By Steve Rothwell and Maud Van Gaal

May 17 (Bloomberg) -- Airlines were forced to ground 1,000 flights across Europe today as the return of the Icelandic ash cloud closed terminals from Northern Ireland to the Netherlands.

London Heathrow, the region’s busiest airport, suffered more than 150 cancelations before reopening at 7 a.m. and Amsterdam Schiphol, the fifth-busiest, shut for seven hours until 1 p.m. Many flights that do operate are being delayed.

An eruption of the Eyjafjallajökull volcano on April 14 closed European airspace for six days last month, grounding 100,000 flights at a cost of $1.7 billion, according to industry figures. Dust from the 5,000-foot crater has drifted across the region intermittently in the 4 1/2 weeks since, shutting airports as far south as Morocco and the Canary Islands.

“After a relatively quiet period the volcano erupted again last week and the ash is reaching the sort of altitudes where it’s funneled south towards Europe,” U.K. Met Office spokeswoman Sarah Holland said in a telephone interview. “The forecast is for winds to become more southwesterly and that may help carry the ash away again and limit the disruption.”

Volcanic dust is a threat to planes because the abrasive, silica-based material may clog engines and scar windscreens. Speed sensors, critical in flight, can also be disabled.

No-Fly Zones

Maps of no-fly zones supplied by Eurocontrol, which oversees flight paths in the region, showed two ash clouds at lower levels, one stretching southeast from Iceland to Shetland and then south to southern Scotland, the other lying across Ireland, Wales, southern England and the English Channel.

About 28,000 flights should take place in Europe today, 1,000 less than the usual number, Eurocontrol said in a statement. About 400 services were canceled yesterday, mostly in the northwestern U.K. and Ireland, it said.

“Although the ash problem is not something that will last forever, we don’t know when it’s going to end,” said Jay Ryu, a Hong Kong-based analyst at Mirae Asset Securities Co. “This is delaying a recovery in the industry.”

The U.K. Civil Aviation Authority lifted a no-fly zone over central and northern Britain that had initially been due to apply until 1 p.m. “following further information from the Met Office about the nature and location of the ash cloud,” National Air Traffic Services Ltd. said on its website.

Dublin airport began accepting flights at midday, the Irish Aviation Authority said. Airports further north and west remain shut, including Belfast City in Northern Ireland and those in the Scottish islands of Shetland and Orkney.

BA, Ryanair

British Airways Plc reported “significant disruption” to operations this morning. Ryanair Holdings Plc, Europe’s biggest discount carrier, scrapped more than 200 flights because of airspace restrictions, according to its website.

Gatwick began accepting both takeoffs and landings from 10:55 a.m. after more than 100 cancellations. Both there and at Heathrow, passengers are being advised that some flights will still be delayed or canceled as a result of earlier closures.

“The difficulty for all of us is that this is a movable feast,” said Malcolm Robertson, a spokesman for BAA Ltd., which owns Europe’s busiest airport. “There are some operating restrictions in place which have been imposed by NATS which essentially mean there will be some delays and cancellations.”

Air France-KLM Group diverted flights headed for Amsterdam to cities including Paris, Dusseldorf and Frankfurt in Germany and Maastricht in the Netherlands.

Asian Impact

Cathay Pacific Airways Ltd. diverted two London-bound flights and one heading to Amsterdam that left Hong Kong overnight, according to an e-mailed statement. Singapore Airlines Ltd. diverted two European flights and said it would operate a flight due to depart Amsterdam from Frankfurt instead.

All Nippon Airways Co. planned to delay a London-bound flight from Tokyo by an hour and warned passengers that it may still need to divert to Frankfurt or Paris, said Yoshifumi Miyake, a spokesman, by phone. Japan Airlines Corp. and Qantas Airways Ltd. intended to continue operating flights, while saying disruption was possible. Malaysian Airline System Bhd. planned to reschedule London and Amsterdam flights.

To contact the reporters on this story: Steve Rothwell in London at [e-mail]; Maud van Gaal at

Last Updated: May 17, 2010 07:41 EDT