Philadelphia-Area Manufacturing Increased to 7.3 in January

January 19, 2012, 12:21 PM EST By Timothy R. Homan

(Updates with markets in seventh paragraph.)

Jan. 19 (Bloomberg) -- Manufacturing in the Philadelphia region expanded at faster pace in January as employment picked up and factories grew more optimistic about business in the next six months.

The Federal Reserve Bank of Philadelphia’s general economic index increased to a three-month high of 7.3 from 6.8 in December, according to a report released today. Economists surveyed by Bloomberg News forecast the gauge would rise to 10.3. Readings greater than zero indicate expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Household and business demand, along with leaner inventories, are encouraging factories to bring on more employees and boost hours worked. At the same time, a possible recession in Europe and a weaker euro pose a risk to U.S. manufacturers’ overseas sales.

“The U.S. economy should grow moderately and that would support decent gains in manufacturing,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said before the report. “How much that will continue is a question as we really don’t know yet the extent of the European downturn.”

Estimates in the Bloomberg survey of 56 economists ranged from 7 to 16.8.

Another report today showed jobless claims plunged by 50,000 to 352,000 last week, the lowest level since April 2008, according to Labor Department figures. The decline was the biggest since September 2005, when claims first surged then slumped in the aftermath of Hurricane Katrina.

Stocks Gain

Stocks gained after the claims figures, with the Standard & Poor’s 500 Index climbing 0.3 percent to 1,311.34 at 10:23 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 1.94 percent from 1.9 percent late yesterday.

The cost of living was little changed in December for a second month, the Labor Department also reported. The unchanged reading in the consumer-price index was less than the 0.1 percent gain median forecast of economists surveyed by Bloomberg. Costs excluding food and energy rose 0.1 percent last month as projected.

The Commerce Department said builders began work on fewer homes in December, reflecting a slump in multi-family unit construction. Home starts dropped 4.1 percent to a 657,000 annual rate.

The Philadelphia Fed bank’s employment index increased to 11.6, the highest level since May, from 11.5 in the prior month. The new orders measure fell to 6.9 from 10.7 in December. A measure of the average workweek climbed to 5 from 2.8.

Shipments and Prices

The shipments gauge decreased to 5.7 from 9.1 last month. The index of prices paid rose to 31.8 from 30.4 in December, and the measure of prices received advanced to 11.2 from 10.3.

The overall index isn’t composed of the individual measures, so some economists consider it a gauge of sentiment among manufacturers.

The group’s measure of the outlook for the next six months improved to 49 in January, the highest level since March, from a reading of 40 a month earlier.

The Philadelphia-area factory report follows data earlier this week from the Federal Reserve Bank of New York that showed manufacturing in the area expanded in January at the fastest pace in nine months.

Industrial Production

Industrial production in the U.S. rebounded last month, reflecting gains in demand for business equipment, automobiles and construction materials, figures from the Federal Reserve showed yesterday in Washington. Factory production, which makes up about 75 percent of total output, climbed by the most in a year.

Last year “proved to be a challenging environment, most notably with the difficulties in the European region,” Roger Wood, president and chief executive officer at Dana Holding Corp., said Jan. 10 at an auto industry conference in Detroit.

The head of the Maumee, Ohio-based maker of truck axles and frames said Europe will also play an important role this year. “Looking forward, we continue to foresee a mixed global outlook. We expect slow growth in North America and much better growth in both Asia and South America. We believe that Europe will continue to lag.”

--Editor: Vince Golle

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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Euro-Area Manufacturing, Services Contract Less Than Estimated

January 05, 2012, 12:08 AM EST By Scott Hamilton

Jan. 4 (Bloomberg) -- Euro-area services and manufacturing output contracted less than initially estimated in December, led by Germany, the region’s largest economy, where output reached a four-month high.

A euro-area composite index based on a survey of purchasing managers in both industries rose to 48.3 from 47 in November, London-based Markit Economics said in an e-mailed report today. That’s above an initial estimate of 47.9 on Dec. 15. A reading below 50 indicates contraction. The German composite output gauge rose to 51.3 from 49.4.

Europe’s economy is edging toward a recession as governments toughen budget cuts to contain the region’s debt crisis just as global demand for exports falters. The International Monetary Fund may cut its 2012 global growth forecast this month after lowering it to 4 percent in September, when it predicted “severe” repercussions if Europe fails to contain its crisis.

“The uplift in the euro-zone PMI in December does little to dispel fears of the region sliding back into recession,” Chris Williamson, chief economist at Markit, said in today’s report.

“Despite the upturn, the fourth quarter saw the steepest contraction since the spring of 2009, and forward-looking indicators suggest that a further decline is on the cards for the first quarter of 2012,” he said. “In particular, orders for goods and services continued to collapse, suggesting that output and employment will be cut as we move into the new year.”

A gauge of euro-region manufacturing rose to 46.9 in December from 46.4 in the previous month. A measure of services climbed to 48.8, a three-month high, Markit said.

--Editors: Patrick G. Henry, Jones Hayden

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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Contraction in China’s Manufacturing Boosts Easing Case: Economy

December 30, 2011, 10:45 PM EST By Bloomberg News

Dec. 30 (Bloomberg) -- China’s manufacturing contracted for a second month in December as Europe’s debt crisis cut export demand, fueling speculation that the central bank may cut lenders’ reserve requirements within days.

A purchasing managers’ index was at 48.7 in December from 47.7 in November, HSBC Holdings Plc and Markit Economics said today. A reading below 50 indicates a contraction.

Export orders fell in December for the first time in three months and domestic demand was “sluggish,” today’s report said. Demand for cash ahead of the week-long Chinese Lunar New Year holiday starting Jan. 23 may give officials an additional reason to cut banks’ reserve ratios after a reduction last month that was the first since 2008.

“A reserve ratio cut is likely to happen by Jan. 3, before markets resume trading,” said Li Wei, a Shanghai-based economist with Standard Chartered Bank. China’s exports are under threat because “the euro area is slipping into a recession and the U.S. is also expected to slow down in early 2012,” Li said.

A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s austerity measures. Asian stocks rose today, paring the regional index’s first annual decline in three years, on signs of strength in the U.S. economy, where a report yesterday showed stronger-than-forecast home sales.

‘Starting to Bite’

The MSCI Asia Pacific Index added 0.2 percent at 12:42 p.m. in Tokyo, heading for an 18 percent drop this year.

In China, “weakening external demand is starting to bite,” said Qu Hongbin, a Hong Kong-based economist for HSBC. Policy easing may enable China’s economy to avoid a “hard landing,” he said.

Elsewhere in Asia, data from South Korea showed the government wrestling with elevated inflation even as threats to growth mount. The leadership handover in North Korea as Kim Jong Un takes control after the death of Kim Jong Il may undermine confidence in the South by adding to the risk of instability on the Korean peninsula.

South Korea’s inflation exceeded the central bank’s target and all forecasts in a Bloomberg News survey, limiting the scope for an interest-rate cut in January to support growth. Consumer prices rose 4.2 percent from a year earlier, matching November’s gain, Statistics Korea said. The median estimate of 12 analysts was 4 percent, and the central bank targets inflation of 2 percent to 4 percent.

Australian Lending

In Australia earlier, a central bank report showed private lending by banks and other financial companies rose 0.3 percent in November from the prior month, matching the median of nine economists’ forecasts.

In Europe today, reports may show house prices in the U.K. were unchanged in December from a month ago and German retail sales rose 0.2 percent in November from the prior month, according to the median estimates of economists surveyed by Bloomberg.

In Spain, a report may show consumer prices advanced 2.5 percent in December from a year ago, while figures on Italian producer prices may show a 0.1 percent gain in November from the month before, surveys showed.

The Chinese manufacturing index released today is based on answers to questionnaires sent to purchasing executives at over 400 manufacturing companies. The statistics bureau and the China Federation of Logistics and Purchasing will release a separate manufacturing index on Jan. 1. Last month, that gauge showed the first contraction since February 2009.

In November, China’s export growth was the weakest since 2009, excluding seasonal distortions at the start of each year.

Hitachi Construction Machinery Co., Japan’s second-largest heavy-equipment maker, said this month that Chinese demand for excavators will decline in the first half of next year, as the government prolongs a crackdown on property speculation.

Developer China Vanke Co.’s contract sales dropped 36 percent last month from a year earlier, while new home prices in Shanghai, Beijing, Shenzhen and Guangzhou slid from the previous month.

China’s inflation slowed to 4.2 percent in November, the slowest pace in 14 months. Third-quarter economic growth of 9.1 percent was the least in two years.

--Victoria Ruan with assistance from Ailing Tan in Singapore. Editors: Paul Panckhurst, Brendan Murray

To contact Bloomberg News staff on this story: Victoria Ruan in Beijing at vruan1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net

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U.S. Economy: Manufacturing Unexpectedly Accelerates

July 02, 2011, 1:47 PM EDT By Alex Kowalski

(Updates with closing market prices in fifth paragraph.)

July 1 (Bloomberg) -- U.S. manufacturing unexpectedly accelerated in June, supporting the Federal Reserve’s forecast that the economy will strengthen in the second half of 2011.

The Institute for Supply Management’s factory index rose to 55.3, the first gain in four months, from 53.5 in May, the Tempe, Arizona-based group said today. Economists projected a decrease to 52, according to the median forecast in a Bloomberg News survey. Figures greater than 50 signal expansion.

Stocks climbed for a fifth day on signs manufacturing is rebounding from higher commodities costs and shortages of parts caused by the earthquake in Japan. As emerging markets power sales at companies like Parker Hannifin Corp., bigger job gains may be needed to boost confidence among U.S. consumers, whose spending accounts for 70 percent of the economy.

“The Fed is counting on growth to reaccelerate in the second half, and to that extent the manufacturing report is encouraging,” said James O’Sullivan, chief economist at MF Global Inc. in New York. “To be more confident about the economy in the second half, we need a renewed upward turn in the labor market.”

The Standard & Poor’s 500 Index climbed 1.4 percent to 1,339.67 at the 4 p.m. close in New York, extending a weekly rally to 5.6 percent, the most since July 2009. Treasuries fell, pushing up the yield on the benchmark 10-year note up to 3.19 percent from 3.16 percent late yesterday.

A measure of consumer confidence fell more than projected in June, and construction spending in May dropped for a sixth straight month as the housing market remained a hurdle for the expansion, other reports today showed.

Inventories Grow

Estimates for the manufacturing index from 77 economists in the Bloomberg survey ranged from 49 to 55. The supply managers’ report showed factory inventories grew in June at the fastest pace since November. Measures of production, new orders and employment rose at a slower pace.

“We’re not looking at robust recovery period here, but through thick and thin it’s being sustained,” Bradley Holcomb, chairman of the Institute for Supply Management’s factory survey committee, said during a conference call with reporters. “Everybody’s cautious.”

The data are at odds with other figures today that showed manufacturing growth is slowing from China to Europe. China’s factory index fell in June to the weakest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the slowest pace in 17 months, while Italy, Ireland, Spain and Greece contracted.

Confidence among U.S. consumers declined in June. The Thomson Reuters/University of Michigan said today its final index of sentiment fell to 71.5 from 74.3 in May.

Construction Spending

The Commerce Department reported that construction spending in May dropped for a sixth straight month. The 0.6 percent decrease matched the previous month’s decline, which was initially reported as a gain.

Economic growth in the U.S. slowed to a 1.9 percent annual pace in the first quarter from 3.1 percent in the previous three months. Employers added 54,000 workers to their payrolls in May, the smallest number in eight months.

Fed policy makers attributed some of the slowdown in the first half of the year to “factors that are likely to be temporary.”

“The effects of the Japanese disaster on manufacturing output are likely to dissipate in coming months,” Fed Chairman Ben S. Bernanke told reporters on June 22 after the Fed’s two- day policy meeting.

Reports last month suggest supply problems may be starting to ease. U.S. factory output climbed 0.4 percent in May on rising demand for machinery and computers, Fed data showed June 15.

Japanese Production

In Japan, industrial production increased in May by the most since 1953, led by carmakers that restored operations, government figures showed June 29.

Even with the earthquake, unrest in the Middle East and higher commodity prices, manufacturing “has been the rock in the system,” Thomas L. Williams, chief operating officer at Parker Hannifin, said June 16 at a conference in Chicago. “I still feel that way. I’m not worried about a double-dip recession as far as what I’m seeing.”

The Cleveland-based maker of components used in construction equipment and aircraft is focusing on growth in Asia, where it is on track to triple sales to $3 billion, Williams said.

--With assistance from Alex Tanzi and Shobhana Chandra in Washington. Editors: Vince Golle, Christopher Wellisz

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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

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U.S. Stocks Rise to Highest Level Since May on Manufacturing

July 01, 2011, 4:28 PM EDT By Rita Nazareth and Cecile Vannucci

July 1 (Bloomberg) -- U.S. stocks rose, sending benchmark indexes to their highest levels since May and the biggest weekly gains in two years, amid an unexpected pickup in American manufacturing growth.

Home Depot Inc., 3M Co. and Intel Corp. rallied at least 1.4 percent, pacing gains among companies most-dependent on economic growth. Apollo Group Inc. jumped 6.4 percent as the operator of for-profit schools reported earnings that beat analysts’ estimates. KB Home climbed 3.9 percent as the homebuilder said it doesn’t plan to issue equity. Eastman Kodak Co. tumbled 14 percent after a ruling on patent claims against Apple Inc. and Research In Motion Ltd. was postponed.

The Standard & Poor’s 500 Index rose 1.4 percent to 1,339.67 at 4 p.m. in New York. That extended its weekly rally to 5.6 percent, the most for the gauge since July 2009. The Dow Jones Industrial Average gained 168.43 points, or 1.4 percent, to 12,582.77 today. It also advanced the most in a week since July 2009.

“Clearly, today is good news with the manufacturing data,” said Michael Vogelzang, chief investment officer at Boston Advisors LLC, which manages $1.9 billion. “This is just a recovery off of a six-week very difficult period. People are putting the risk trade back on.”

The S&P 500 fell 1.8 percent in June, spurring the first quarterly loss in a year, on concern about Europe’s debt crisis and weaker-than-expected economic data. The index was still up 5 percent in 2011 through yesterday as government stimulus measures, takeovers and higher-than-estimated corporate earnings lifted investors’ confidence.

Stocks extended gains after a report showed that U.S. manufacturing unexpectedly expanded at a faster pace in June, a sign the industry is rebounding after shortages of parts and components from Japan slowed production. The Institute for Supply Management’s factory index rose to 55.3 last month from 53.5 in May. Economists estimated the index would drop to 52, according to the median forecast in a Bloomberg News survey. Figures greater than 50 signal expansion.

The ISM report was a positive surprise at a time when manufacturing growth is slowing from China to Europe, creating a dilemma for central bankers considering higher interest rates to combat inflation. China’s factory index fell to the lowest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted.

Greece’s Financing

Global stocks also rose. Greece may receive as much as 85 billion euros ($124 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the euro-region’s debt crisis, according to an Austrian Finance Ministry official.

“Greece is probably going to avert the default,” said Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $48 billion. “It’s a long process, but near-term, I believe they will resolve everything they need there.”

Stocks should rally during the second half of the year, sending the S&P 500 to 1,550 by the end of 2011, as corporate earnings grow and equities remain cheap, Deutsche Bank AG said.

Equities are less expensive, earnings will expand faster than the U.S. economy and there will be a pickup in growth for domestic cyclical industries such as financials, industrials and technology, Bankim “Binky” Chadha, Deutsche Bank’s New York- based chief U.S. equity strategist, said.

--With assistance from Victoria Stilwell in New York. Editors: Joanna Ossinger, Chris Nagi

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Asian Stocks Drop as U.S. Jobs, Manufacturing Reports Disappoint

June 02, 2011, 6:57 AM EDT By Jonathan Burgos and Shani Raja

June 2 (Bloomberg) -- Asian stocks dropped for the first time in three days after U.S. manufacturing expanded at the weakest pace in more than a year and employers hired fewer workers than forecast, fueling concern the global economic recovery will slow.

Samsung Electronics Co., the Korean consumer-electronics company that gets 85 percent of its revenue from overseas, sank 3.1 percent in Seoul. Sony Corp., Japan’s largest exporter of consumer electronics, lost 1.7 percent in Tokyo. Toyota Motor Corp. and Honda Motor Co. led declines among Japanese carmakers as sales in the U.S. slumped. BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, retreated 2.2 percent after crude oil and metal futures dropped.

The MSCI Asia Pacific Index dropped 1.6 percent to 134.59 as of 7:37 p.m. in Tokyo, paring this week’s advance and set for its biggest drop since May 23. All of the 10 industry groups that make up the gauge declined. More than four stocks dropped for each that rose on the measure, which last week completed its longest streak of weekly losses in two years as concern deepened over Europe’s debt crisis and amid speculation a slowing global recovery will crimp earnings.

“The weak manufacturing and employment data coming on the back of soft data out of Europe and China and another downgrade for Greece have added to concerns about the strength of the global economy,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages $98 billion in Sydney. “Investors are worried it will be something worse, which will be bad for Asian exporters. As a result the risk on- risk off, the roller coaster in global and regional markets continues and right now it’s back to risk off.”

Kan Vote

Japan’s Nikkei 225 Stock Average decreased 1.7 percent ahead of a no-confidence vote on Prime Minister Naoto Kan after the country’s markets closed. The motion was rejected by the lower house of parliament after Kan, who faces discontent over his handling of the March 11 earthquake disaster that triggered the world’s worst nuclear accident in 25 years, signaled he’ll resign once a solution to the nation’s post-quake crisis is in sight.

South Korea’s Kospi Index retreated 1.3 percent. Hong Kong’s Hang Seng Index slipped 1.6 percent, while China’s Shanghai Composite Index sank 1.4 percent. Australia’s S&P/ASX 200 Index dropped 2.3 percent, its steepest fall in a year.

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. In New York, the index retreated 2.3 percent yesterday, its biggest decline since August, after the Institute for Supply Management’s factory index fell last month to its lowest level since September 2009.

Manufacturing, Jobs

Companies in the U.S. last month added jobs at the slowest pace since September. Employment grew by 38,000 in May, data from ADP Employer Services showed yesterday, missing a 175,000 median estimate of economists surveyed by Bloomberg.

Manufacturing growth from China, the U.S. and Europe slowed in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and financial shocks. Greece’s risk of default was raised to 50 percent by Moody’s Investors Service as European officials rushed to put together the second bailout plan in two years to stave off renewed financial turmoil in the region.

“The global economy has hit a soft patch and more investors are shying away from risk assets.” said Mitsushige Akino, who oversees the equivalent of $600 million at Ichiyoshi Investment Management Co. in Tokyo.

Billabong International Ltd., the world’s largest surfwear maker, dropped 3.4 percent to A$6.20 in Sydney. Samsung Electronics, which gets about 22 percent of sales from America, dropped 3.1 percent to 883,000 won in Seoul. LG Electronics Inc., the world’s third-biggest maker of mobile phones, tumbled 4.4 percent to 94,200 won. Sony, the maker of PlayStation gaming consoles and Bravia televisions, lost 1.7 percent to 2,142 yen in Tokyo.

Auto Slump

Acer Inc., the world’s second-biggest supplier of notebook computers, slumped 7 percent to NT$51.90 in Taipei, its steepest drop since December 1997. The company said it will book an operating loss of $150 million because of an inventory write-off. It also plans to cut 300 jobs in Europe, the Middle East and Africa to reduce expenses.

Carmakers declined as industry-wide U.S. auto sales fell to 1.06 million cars and light trucks last month from 1.1 million a year earlier, according to a report from Autodata Corp., of Woodcliff Lake, New Jersey. Toyota and Honda, the automakers hardest hit by Japan’s record earthquake, led U.S. sales declines among Asian-based car manufacturers in May as supplies of some models ran low, the report showed.

Toyota, the world’s biggest carmaker, decreased 3.3 percent to 3,270 yen. Honda, which gets about 44 percent of sales from North America, dropped 2.4 percent to 3,045 yen. Nissan Motor Co., Japan’s No. 3 automaker by market value, sank 3.2 percent to 781 yen.

Oil, Metals

A gauge of raw material producers led the drop among the 10 industry groups in the MSCI Asia Pacific Index. BHP dropped 2.2 percent to A$43.55 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, fell 1.8 percent to A$80.10. Jiangxi Copper Co., China’s No. 1 producer of the metal, slipped 3 percent to HK$25.65 in Hong Kong. Cnooc Ltd., the nation’s largest offshore oil producer, dipped 2.2 percent to HK$18.96.

Crude oil for June delivery declined 2.4 percent to settle at $100.29 a barrel in New York yesterday, the biggest drop in a single-session since May 11. The London Metal Exchange Index of prices for six metals including copper and aluminum lost 1 percent.

The MSCI Asia Pacific Index slid 0.6 percent this year through yesterday, compared with gains of 4.5 percent by the S&P 500 and 0.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.8 times estimated earnings on average, compared with 13.3 times for the S&P 500 and 11.2 times for the Stoxx 600.

--With assistance from Norie Kuboyama and Satoshi Kawano in Tokyo. Editors: John McCluskey.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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