Manufacturing in the Philadelphia region expanded in March at the fastest pace in almost a year as factory employment picked up.
The Federal Reserve Bank of Philadelphia’s general economic index increased to 12.5 this month, in line with projections, from 10.2 in February. Economists forecast the gauge would rise to 12, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Manufacturers are positioned to keep expanding as companies rebuild stockpiles and invest in new equipment. What’s more, labor market gains may help bolster consumer spending, the biggest part of the economy, and further propel the industry.
“Manufacturing has been leading the economy in recent quarters,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc., said before the report. “Exports bear watching given the troubles in Europe.”
Estimates from the 59 economists surveyed for the Philadelphia Fed index ranged from 6 to 18.5.
Manufacturing in the New York region expanded in March at the fastest pace since June 2010, indicating factories are still driving the expansion, another Fed report showed today.
The Federal Reserve Bank of New York’s general economic index unexpectedly increased to 20.2 this month from 19.5 in February. The median forecast in a Bloomberg survey of economists was 17.5. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
Claims for jobless benefits dropped more than projected last week, matching the lowest level in four years. Applications for unemployment insurance declined by 14,000 to 351,000 in the week ended March 10, the Labor Department said today.
Higher fuel costs drove wholesale prices up in February by the most in five months, another report showed. The producer price index climbed 0.4 percent after a 0.1 percent gain in January, according to the Labor Department. The core measure, which excludes food and energy, rose 0.2 percent, less than in the prior month.
Rising energy prices are doing little to stifle consumer sentiment. The Bloomberg Consumer Comfort (COMFCOMF) Index climbed to minus 33.7 in the period to March 11, the strongest since March 2008, from minus 36.7 the previous week. A buying-climate gauge reached the highest level since November 2007, and a measure of the state of the economy had its best showing since September 2008.
The Philadelphia Fed’s employment index increased to 6.8 in March from a reading of 1.1 last month. The new orders measure fell to 3.3 from 11.7 in February, and the shipments gauge decreased to 3.5 from 15. A measure of the average workweek fell to 2.7 this month from 10.1 in February.
Individual measures in the index don’t contribute to the headline reading, so some economists consider it a gauge of sentiment among manufacturers.
Economists monitor Philadelphia and New York Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing. The ISM will release its report on April 2.
Production of automobiles is contributing to factory growth. Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. (GM) Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008, according to Ward’s Automotive Group.
“There are a number of factors that are helping release this pent-up demand,” Don Johnson, vice president of GM’s U.S. sales, said on a March 1 conference call with analysts. “They include stronger employment, good credit availability, and both of those are leading to improving consumer sentiment.”
While the job market is improving, Federal Reserve policy makers said the unemployment rate is too high.
“Labor market conditions have improved further,” Federal Open Market Committee members said in a March 13 statement. “The unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance.”
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