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Sept. 15 (Bloomberg) -- Manufacturing in the Philadelphia region contracted for a second straight month in September as sales deteriorated.
The Federal Reserve Bank of Philadelphia’s general economic index improved to minus 17.5 from minus 30.7 last month. Economists forecast the gauge would rise to minus 15, according to the median estimate in a Bloomberg News survey. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Manufacturers may keep production below the pace seen earlier this year as a stagnant labor market and limited consumer spending weaken prospects for stronger economic growth. The European debt crisis and a slowing global economy may further restrain U.S. production.
“Manufacturing is just moving sideways,” Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “We’re not seeing a lot of growth nor are we seeing a lot of contraction right now.”
Estimates for the manufacturing gauge from the 60 economists surveyed ranged from minus 25 to zero.
Stocks rallied as a package of dollar loans for European banks assuaged concern about the U.S. economy. The Standard & Poor’s 500 Index climbed 0.9 percent to 1,199.03 at 10:21 a.m. in New York.
The report showed the Philadelphia Fed’s shipments gauge decreased to minus 22.8 in September, the lowest since April 2009, from minus 13.9. The new orders measure rose to minus 11.3 this month from minus 26.8 in August.
The index of prices paid increased to 23.2 from 12.8 the prior month, while the measure of prices received improved to 0.9 from minus 9.
The employment index in the Philadelphia Fed report increased to 5.8 from a reading last month of minus 5.2. A measure of the average workweek was little changed at minus 13.7 in September after minus 14.4.
Individual measures in the index don’t contribute to the headline reading, so some economists consider it a gauge of sentiment among manufacturers.
Other reports today showed more Americans than projected filed claims for jobless benefits, consumer prices rose more than forecast and New York-area manufacturing contracted more than estimated.
Applications for unemployment benefits unexpectedly rose last week to the highest level since the end of June. Jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10 that included the Labor Day holiday, figures from the Labor Department showed in Washington.
The department also said the cost of living rose in August as consumers paid more for food, energy and housing, the Labor Department also said. The consumer-price index increased 0.4 percent after a 0.5 percent gain in July. Costs minus fuel and food climbed 0.2 percent for a second month.
A Federal Reserve Bank of New York report showed manufacturing in the region contracted at a faster pace in September. The New York Fed’s general economic index dropped to minus 8.8, the weakest reading since November, from minus 7.7 in August. Readings less than zero signal companies in the so- called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, are cutting back.
Economists monitor Philadelphia and New York Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing during the month. The ISM will release its report on Oct. 3.
Deteriorating economic conditions in the U.S. and abroad have threatened to curb manufacturing, which helped lead the recovery.
“Sovereign debt concerns in Europe, inflation pressures in China and a continued weak housing market and persistent high unemployment here in U.S. are causing uncertainty around the pace of global growth,” Howard Ungerleider, senior vice president of Dow Chemical Co. said at a Sept. 13 investor conference. “The global economy, while continuing to recover, will do so at an uneven pace.”
--With assistance from Chris Middleton in Washington. Editor: Vince Golle
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