Manufacturing in the New York region contracted this at the slowest pace since September and the outlook for the next six months improved for a second time. The Federal Reserve Bank of New York’s general economic index rose to minus 14.7, better than forecast, from minus 38.2 the prior month when it reached its lowest level since data began in 2001, the bank said today. Readings below zero for the Empire State index signal manufacturing activity is shrinking. President Barack Obama said yesterday that the economy is showing signs of progress while warning that 2009 “will continue to be a difficult year.” The Obama administration has passed record stimulus measures and the Federal Reserve is flooding markets with cash to reignite demand and pull the economy out of its recession. “Although the pace of contraction is moderating, manufacturing remains in a deep downturn,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The severity of the downturn in manufacturing will depend in large part on the effectiveness of the government stimulus package to improve the flow of credit, repair confidence, and stabilize demand.” Economists projected the Empire State index would climb to minus 35, according to the median of 50 estimates in a Bloomberg News survey. Forecasts ranged from minus 25 to minus 49.1. Factory executives in the New York Fed’s district, which encompasses New York state, northern New Jersey and one county in Connecticut, turned more optimistic about the future. The gauge measuring the manufacturing outlook for six months jumped to 33.1 from to 3.1. New Orders, Shipments The measure of new orders increased to minus 3.9 and a gauge of shipments rose to minus 1.8 from minus 26.7. The index of inventories decreased to minus 36 from minus 27. The index of prices paid was unchanged at minus 14.6, and the gauge of prices received increased to minus 18 from minus 23.6. A measure of employment rose to minus 28.1 from minus 38.2. Today’s report is one of the earliest measurements of regional manufacturing this month. The Philadelphia Fed report, due out tomorrow, may show manufacturing in that region also contracted in April, according to the Bloomberg survey median. The slowdown in global demand and falling commodity prices are hurting U.S. companies. New York-based Alcoa Inc., the largest U.S. aluminum maker, on April 7 reported its second straight quarterly loss as the global recession reduced demand for the metal used in automobiles and appliances. Alcoa has fired 13,500 workers, sought pay cuts from salaried and hourly workers and idled about 20 percent of production since the second half of 2008. “While our financial performance in the quarter was adversely affected by the economy-driven drop in demand, we launched operational and financial measures that will significantly improve our profitability,” Alcoa’s Chief Executive Officer Klaus Kleinfeld said in a statement. Manufacturers have been at the forefront of the downturn. U.S. manufacturers reduced payrolls by 161,000 workers last month, following the 169,000 jobs cut in February, according to data from the Labor Department. Economists surveyed by Bloomberg News March 30 to April 8 projected the U.S. jobless rate will reach 9.5 percent this year and the economy will shrink 2.5 percent, the worst performance since 1946.

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