Philadelphia-area manufacturing increased in January
Manufacturing in the Philadelphia region expanded at a faster pace in January, as hiring picked up and facilities grew more optimistic about business in the next six months, according to Bloomberg.
The news source reported that the Federal Reserve Bank of Philadelphia's general economic index increased to a three-month high of 7.3 from 6.8 in December. The report, released on January 19, showed that expansion occurred in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Bloomberg reported that household and business demand, coupled with leaner inventories, have motivated manufacturers to bring on more employees and boost the number of hours that they work. Other possible factors may include the ongoing crisis in Europe and the resulting drop in the value of the euro.
"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, told the news source. "How much that will continue is a question as we really don’t know yet the extent of the European downturn."
Along with the rise in the overall economic activity in the region, the index of prices paid rose to 31.8 from 30.4 in December, and the measure of prices received grew to 11.2 from 10.3.
According to Bloomberg, some economists consider the Fed's index to be a gauge of sentiment among manufacturers. The group's measure of the outlook for the next six months rose to 49 in January, the highest level achieved since March.
The news source reported that industrial production in the U.S. rebounded last month, due in part to gains in demand for business equipment, construction materials and automobiles. Manufacturing facility production, which makes up roughly 75 percent of the total output, rose 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, according to Bloomberg.
The positive news from Philadelphia came as manufacturing declined in Asia.
The Wall Street Journal reported that China's manufacturing activity contracted for the third straight month in January, according to an early indicator, signaling that the growth in the second-largest economy is slowing.
"The third consecutive below-50 reading of the manufacturing PMI suggested that growth is likely to moderate further," Qu Hongbin, HSBC's chief China economist, said in a statement, according to the news source. "We expect more policy easing to stabilize growth."