Thursday, June 18, 2009

Philadelphia Area Factory Index Rose to -2.2 in June, Fed Says

Manufacturing in the Philadelphia region contracted in June at the slowest pace in nine months as measures of orders and sales improved.

The Federal Reserve Bank of Philadelphia’s general economic index climbed to minus 2.2 from minus 22.6 in May, the bank said today. Negative numbers signal contraction.

The slump in manufacturing may abate after companies reduced inventories in the first quarter at the fastest pace on record. Still, production cutbacks and plant closures at carmakers General Motors Corp. and Chrysler Group LLC are likely to depress factory production in coming months.

“The bulk of the downturn is behind us but we still haven’t crossed that threshold toward expanding the industrial sector,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. “It looks like most of the inventory liquidation is over and that means we’ll see manufacturers boost production in the second half of the year.”

Economists forecast the index would improve to minus 17, according to the median of 50 projections in a Bloomberg News survey. Estimates ranged from minus 9 to minus 24.

The index of leading economic indicators climbed 1.2 percent in May, more than forecast, following a 1.1 increase in April, the New York-based Conference Board reported today. It was the biggest back-to-back gain since November-December 2001, at the end of the last recession.

A report from the Labor Department showed the number of Americans receiving claims for unemployment benefits plunged by 148,000 in the week to June 6, the most since November 2001, to 6.69 million. The average number of claims over the last four weeks fell to the lowest level in four months, dding to evidence the job market is starting to thaw.