Tag: jobless claims

Manufacturing in Philadelphia Area Grows More Than Forecast

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Manufacturing in the Philadelphia region expanded in October for the first time in six months, a sign the industry may be starting to stabilize.

The Federal Reserve Bank of Philadelphia’s general economic index rose to 5.7 from minus 1.9 in September, a report today showed. A reading of zero is the dividing line between expansion and contraction. The median forecast of 61 economists surveyed by Bloomberg was for an increase to 1.

he report, contrasting with data showing New York-area factories shrank for the third straight month, indicates that a pillar of the recovery is starting to regain its footing. Gains in confidence and household wealth mean consumer spendingmay help cushion manufacturing at a time when business investment and exports are hurt by slowing global growth and uncertainty about U.S. tax changes.

“Manufacturing has troughed in terms of the declines in activity,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “As the recession in Europe becomes less severe, it will take the pressure off exports. There is some demand” in the U.S.

The Philadelphia Fed’s report covers eastern Pennsylvania, southern New Jersey and Delaware. Estimates in the Bloomberg survey ranged from minus 2.7 to 5.8.

Jobless Claims

Other reports today showed more Americans than forecast filed applications for unemployment benefits last week,consumer confidence rose to a six-month high and the index of leading indicators climbed more than forecast in September.

Jobless claims increased by 46,000 to 388,000 in the week ended Oct. 13, reflecting an unwinding of adjustments for seasonal swings at the start of a quarter, from a revised 342,000 the prior period that was the lowest since February 2008, according to Labor Department data.

The Bloomberg Consumer Comfort Index rose to minus 34.8 in the week ended Oct. 14, the highest level since April, from minus 38.5 the previous week. The monthly expectationsgauge improved to minus 7 in October, the best reading since May.

The Conference Board’s gauge of the outlook for the next three to six months increased 0.6 percent last month after a revised 0.4 percent drop in August that was bigger than initially reported, the New York-based group said. Economists projected the gauge would climb 0.2 percent, according to the median estimate in a Bloomberg survey.

Component Breakdown

The Philadelphia Fed’s overall index isn’t composed of the individual measures, one reason some economists consider it a gauge of sentiment among manufacturers. Manufacturing makes up about 12 percent of the U.S. economy.

The breakdown of today’s Philadelphia Fed data was less encouraging than the headline reading. The employment index decreased to minus 10.7, the lowest reading since September 2009, from minus 7.3. The new orders measure dropped to minus 0.6, the fifth contraction in the past six months, from a reading of 1 in September.

The shipments gauge climbed to minus 0.2 from minus 21.2. Its inventory index rose to 2.1 from minus 21.7.

The index of prices paid rose to 19 from 8, while a gauge of prices received increased to 5.4 from minus 0.2.

Factory managers in the region also become less optimistic about the future. The gauge of the outlook for six months from now dropped to 21.6 this month from 41.2 in September.

Figures from the New York Fed on Oct. 15 showed the so- called Empire State index rose to minus 6.2 this month from September’s minus 10.4 reading.

Less Optimistic

Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management national figures on manufacturing. The ISM report is due on Nov. 1.

The automobile industry remains a source of growth. Cars and light trucks sold at a 14.9 million annual pace in September, the most since March 2008, according to data from Ward’s Automotive Group. Chrysler Group LLC and General Motors Co. (GM) reported gains.

Businesses restrained by weakening overseas growth include Alcoa Inc. (AA), the largest U.S. aluminum producer. The New York- based company cut its forecast for global consumption of the metal on slowing Chinese demand.

“We do see a slight slowdown in some regions in end- markets, and the main driver for this isChina,” Chairman and Chief Executive Officer Klaus Kleinfeld said on a conference call with analysts this month.

Manufacturing also is stabilizing at the national level, a report showed this week. Industrial production, or output at factories, mines and utilities, rose 0.4 percent in September after a 1.4 percent drop in August that was the biggest since March 2009, according to Fed data issued Oct. 16.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Leading the News

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Unemployment Claims Continue To Fall.

The CBS Evening News (12/22, story 2, 2:05, Pelley) reported that “there are some other encouraging things about the economy” now, including a drop in the number of people filing for unemployment last week, which fell to 364,000, the lowest “since April of 2008.”

According to Bloomberg News (12/22, Homan, Willis), the 45 economists surveyed by Bloomberg had predicted an average “increase in jobless claims to 380,000,” however “the number of applications” has fallen 40,000 in the last three weeks. Chief US economist for High Frequency Economics, Ian Shepherson, said “this is great news,” and while “one unexpectedly low number can easily be a fluke” and “two are interesting,” three may say “something real is happening in the labor market.” Further, there was a decline of 79,000 in the number of “people continuing to receive jobless benefits,” now down to 3.55 million, the lowest level since September 2008.

According to the AP (12/22, Wagner, Crutsinger), “the steady improvement in the job market is unquestionable,” and BMO Capital Markets senior economist Jennifer Lee says “I think everyone is starting to come around to the view that, yes, there is a recovery going on.” Further, minus “a spike this spring” following damage to “US manufacturing” after the earthquake and tsunami in Japan, “unemployment claims” have been declining “steadily for a year and a half” after peaking “at 659,000 in March 2009.” In the four years prior to “the Great Recession,” the numbers were usually between 300,000 and 350,000.

The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) notes that these weekly unemployment claims may vary due to seasonal differences, but the monthly averages for the past three months have shown declines in unemployment applications, and economists are now predicting a more positive outlook for job hiring.

US Economy Projected To Grow About Two Percent In 2012. The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) reports that economists are now predicting that in 2012 the US economy will grow at a rate of about two percent based on continued issues in the housing market, tepid job growth, government spending cuts and the economic crisis in Europe. However, this forecast means that 2012 should see a bit more growth than this year’s estimated 1.7 percent yearly growth, and it’s possible that growth will be higher than anticipated in 2012, especially given Q4 2011’s predicted 3.5 percent growth.


Consumer Confidence Edges Higher, Beating Expectations. Bloomberg News (12/22, Willis) reports, “The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 from 64.1 at the end of November.” A Bloomberg News survey projected that consumer sentiment, or confidence, would increase to “for 68 after a preliminary reading of 67.7.” According to Bloomberg, “a drop in unemployment and lower gasoline prices may be boosting confidence, raising the odds that the pickup in household spending will continue into 2012.”

Canadian Manufacturing On The Rebound.

The Globe and Mail (Toronto, CA) (12/23) reports a slideshow titled, “Manufacturing set for year-end rebound,” noting that “Canadian manufacturing had its second-best month for 2011 in October and analysts expect another increase this month.” The slideshow focuses on the metals sector.

Auto, Energy Industries To Drive Steel Industry Growth.

Following earlier reports on the mixed but generally upbeat predictions for the US steel industry, IndustryWeek (12/23, Katz) reports, “The industry is not expected to reach a full recovery until 2013, according to Fitch Ratings.” Monica Bonar, a senior director at Fitch, said “steel producers are being cautious about how much inventory they’re stocking, including raw materials, on fears of a downturn.” Larry Kavanagh, president of the Steel Market Development Institute, said demand from the auto industry is expected to rise in the coming year, and that “the energy sector presents significant growth potential for the steel industry, led by the boom in shale gas exploration and distribution.”

Missouri Gains 11,000 Manufacturing Jobs.

The Kansas City Business Journal (12/23, Subscription Publication) reports “Missouri gained 10,900 manufacturing jobs between December 2010 and last month, an accomplishment Gov. Jay Nixon lauded Thursday.” Nixon said, “For generations, manufacturing has been a vital driver of Missouri’s economy, and modern manufacturing companies have offered opportunities for outstanding careers to folks across our state.” Nixon “also praised growth yet to come in the state’s automotive sector, particularly Ford Motor Co. and General Motors Co. making historic announcements in October.”

Mass Layoffs Decline In Missouri. Another Kansas City Business Journal (12/23, Subscription Publication) article reports, “Missouri mass layoffs were less common in November, dropping to 22 events compared with 29 a year earlier, the US Department of Labor reported Thursday.” In November, “1,440 Missourians made initial claims for unemployment insurance, down from 2,159 a year prior,” the Labor Department reported. And while “the manufacturing sector claimed a quarter of the mass layoff events,” the article notes that “15 of the 21 manufacturing subcategories saw over-the-year decreases in claims.”

From SME Daily Executive Briefing 12.23.2011