Manufacturing in the New York region expanded in June at a faster pace, signalling factories are weathering the turmoil in financial markets and driving the economic recovery.
The Federal Reserve Bank of New York’s general economic index rose to 19.6, an 11th consecutive month of growth and in line with the median forecast of economists surveyed by Bloomberg News. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
Manufacturing gains, which helped pull out the world’s largest economy from the worst recession since the 1930s, will keep bolstering the expansion and spur hiring. While the need to replenish inventories may be less pressing in coming months, household spending and exports will continue to fuel production.
“Manufacturing remains a key part of the recovery,” Stephen Gallagher, chief U.S. economist at Societe Generale SA in New York, said before the report. “Consumer spending is chugging along, business investment is healthy and we have moderate growth in exports, which are conditions for ongoing growth.”
Prices of goods imported into the U.S. fell in May, led by the biggest drop in petroleum costs since December 2008, a report from the Labor Department also showed today. The 0.6% decrease in the import price index was less than the median forecast of economists surveyed and followed a 1.1% gain in April. Prices excluding petroleum rose 0.5 percent for a second month, led by higher costs for capital goods and metals.
Stock-index futures held earlier gains following the reports. The contract on the Standard & Poor’s 500 Index climbed 0.6% to 1,093.2 at 8:33 a.m. in New York. Treasury securities were little changed.
Economists forecast the New York Fed’s index would increase to 20 this month from 19.1 in May, according to the median of 55 projections in a Bloomberg News survey. Estimates ranged from 15 to 25. Manufacturers account for about 6% of New York’s economy.
The New York Fed’s gauge of new factory orders increased to 17.5 this month from 14.3 in the prior month. A measure of shipments climbed to 19.7 from 11.3.
The employment measure decreased to 12.4 from 22.4, while the length of the average workweek increased.
Factories nationally have added 126,000 workers to payrolls since the start of the year, according to Labor Department data. Manufacturers boosted payrolls by 29,000 in May, a fifth consecutive gain, the workweek lengthened and the average amount of overtime climbed to the highest level in two years as production accelerated on factory floors.
Today’s report showed an index of prices paid dropped to 27.2 from 44.7, while prices received also cooled.
The factory executives’ future outlook held up even as the European debt crisis intensified, hurting global stock markets. The gauge measuring the outlook six months from now fell to 40.7 from 42.1 in May.
Some of the region’s companies reflect the growth in manufacturing. Pall Corp., a supplier of filters for drugmakers and refineries, reported third-quarter earnings that exceeded analysts’ estimates as sales increased. Full-year profit per share will be at the high end of Pall’s March projections, the Port Washington, New York-based company said.
“The expected industrial recovery appears to now be firmly underway,” Chief Executive Officer Eric Krasnoff said in a statement on June 8.
Among other regional surveys, economists surveyed by Bloomberg News project the Philadelphia Fed’s general economic index, to be released June 17, fell to 20 from 21.4 in May. Readings above zero for that measure also signal expansion.
A Fed report tomorrow may show industrial production rose 0.9 percent in May, the 10th gain in the past 11 months, following a 0.8% increase in April, according to economists surveyed.
Manufacturers make up 12% of the economy and are benefitting from a revival in household spending and expanding global economies.
The biggest jump in consumer spending since 2007 and a 13% gain in business investment in business purchases of new equipment and software helped the economy grow at a 3 percent annual rate from January through March, the third straight quarter of expansion.
