New Order 13.43 from 5.89 (august vs july)
Manufacture Index 12.08 from -0.55
Employment Index -7.45 from -20.83
Aug. 17 (Bloomberg) -- Manufacturing in the New York region
grew in August for the first time in more than a year,
reinforcing signs the worst recession since the 1930s is nearing
an end.
The Federal Reserve Bank of New York’s general economic
index climbed to 12.1, higher than forecast and the first
expansion since April 2008, the bank said today. Readings above
zero for the Empire State index signal manufacturing activity is
growing.
Today’s report, one of the first regional factory measures
for the month, indicates companies are restarting assembly lines
after slashing inventories at a record rate. Economists project
growth will resume this quarter, helped by stabilization in
manufacturing and housing.
“Manufacturing is in the midst of a turnaround,” John
Herrmann, president of Herrmann Forecasting in Summit, New
Jersey, said before the report. “Inventories are lean relative
to sales and companies will need to restock. It means orders
will rise and production will rise” in coming months.
Economists projected the Empire State index would rise to
3, according to the median of 41 estimates in a Bloomberg News
survey. Forecasts ranged from 8 to minus 5.
The August reading was the highest since November 2007, the
month before the recession began. The index was at minus 0.6 in
July.
Manufacturers account for 6 percent of New York’s $1.1
trillion economy.
Breakdown
The New York Fed’s measure of new orders increased to 13.4,
from 5.9. A gauge of shipments rose to 14.1. The index of
inventories gained to minus 22.3 from minus 36.5. A gain signals
stockpiles are being cut at a slower pace.
The index of prices paid climbed to 13.8, while the gauge
of prices received dropped to minus 12.8, signaling that
factories are not able to pass along increasing raw-material
costs to their customers. A measure of employment increased to
minus 7.5, the highest level since October.
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 rose to 48.2, the
highest level since July 2007, from 34.
Industrial production rose for the first time in nine
months in July as the federal “cash-for-clunkers” program
spurred demand for cars and automakers completed mid-year
overhauls of their factories, a Fed report showed last week.
Auto Sales
The auto plan, which provides cash incentives for fuel-
efficient cars, already is boosting vehicle sales and is likely
to help lift production this quarter.
Chrysler Group LLC, the U.S. automaker run by Fiat SpA,
will make more light trucks than it had planned in the second
half to meet growing demand, a person with knowledge of the
situation said last week. Chrysler plans to run two plants on
overtime and is operating a third shift at another factory to
restock dwindled inventory on dealer lots, said the person.
Businesses in the region that are raising forecasts include
White Plains, New York-based ITT Corp. The company said on July
31 that 2009 profit will be higher than its prior forecast after
second-quarter expenses fell.
“There’s signs of life” in some markets, Chief Executive
Officer Steve Loranger said on a conference call on July 31.
Loranger said ITT’s municipal water business has begun to
stabilize as federal economic-stimulus money starts trickling
in. Benefits from the stimulus plan aren’t likely to aid the
company’s results until next year, he said.
Stimulus
“We’re still not forecasting any significant stimulus
benefit this year because the actual distribution of those funds
has been very slow,” Loranger said. “We certainly will get our
fair share.”
A report from the Philadelphia Fed, due on Aug. 20, may
show manufacturing in that region shrank this month at the
slowest pace in almost a year, according to a Bloomberg survey.
A Bloomberg monthly survey of economists showed the economy
will expand 2 percent or more in four straight quarters through
June 2010, the first such streak in more than four years, as the
effects of the government’s fiscal stimulus broaden.
To contact the reporter on this story:
Shobhana Chandra in Washington at
schand...@bloomberg.net
Last Updated: August 17, 2009 08:30 EDT
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