Jan. 18 (Bloomberg) -- Orders and sales at factories in the New York region picked up in January, signaling manufacturing will keep contributing to the expansion. The Federal Reserve Bank of New York’s general economic index rose to 11.9 from a revised 9.9 in December. Economists projected an increase to 12.5, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.
Rising exports and demand for business equipment are boosting demand at manufacturers such as Intel Corp. Improving consumer spending may fuel production even more, giving the recovery an additional boost this year that may persuade companies to ratchet up hiring.
“We’re going to see manufacturing benefit from a weaker dollar, with exports continuing to rise,” said David Semmens, an economist at Standard Chartered Bank in New York. “The turnaround is going to last.”
Stocks fluctuated between gains and losses, depressed by disappointing earnings at Citigroup Inc. and concern about Apple Inc.’s leadership. The Standard & Poor’s 500 Index was little changed at 1,293.6 at 10:18 a.m. in New York. Treasury securities fell, pushing the yield on the benchmark 10-year note up to 3.36 percent from 3.33 percent late yesterday.
Builder Confidence
Other reports today showed homebuilder confidence has stagnated and global demand for U.S. stocks, bonds and other financial assets rose in November from a month earlier to reach the highest level since August.
The National Association of Home Builders/Wells Fargo sentiment index registered a reading of 16 in January, the same as the past two months and less than the median forecast of economists surveyed by Bloomberg News. Readings below 50 mean more respondents said conditions were poor.
Net buying of long-term equities, notes and bonds totaled $85.1 billion during the month compared with $28.9 billion in October, according to figures from the Treasury Department.
The median estimate for the New York factory index of 51 economists surveyed by Bloomberg News survey projected the measure would climb to 12.5. Forecasts ranged from 5 to 20. The data included the annual benchmark revisions.
Today’s report is one of the first regional measures of manufacturing for this month. The Philadelphia Fed is scheduled to release its report on Jan. 20.
Beige Book
The Fed last week said holiday-season spending and increased manufacturing drove the economic expansion across the U.S. in November and December, with businesses cautiously optimistic about their 2011 outlooks.
Manufacturing “continued to recover across all Districts” and Richmond, Chicago and St. Louis respondents “identified a strong flow of new orders” while the Philadelphia region said demand was “erratic,” the central bank said its so-called Beige Book report.
The headline reading for the Empire State Index is a separate question rather than a combination of components, making it more of a sentiment gauge. The report showed every sub-index improved this month, indicating more broad-based strength.
The Empire State gauge of new factory orders climbed to 12.4, the highest level since June. A measure of shipments increased to 25.4, a level last exceeded in April. Employment rose to 8.4 from minus 3.4.
Manufacturers nationally added 136,000 workers to their payrolls last year, according to Labor Department data. In December, factory payrolls rose by 10,000, the first increase in five months.
Prices Climb
Today’s report showed an index of prices paid rose to 35.8 from 28.4 in December, while prices received increased to 15.8, the highest level since October 2008. The gains signal factories are having some success in passing increasing raw-material costs to customers.
Factory executives in the New York Fed’s district were more optimistic about the future. The gauge measuring the outlook six months from now climbed to 59, the highest level since March 2004.
Manufacturing makes up 11 percent of the U.S. economy and about 6 percent of the New York economy.
Overseas demand is helping to support factories. Exports rose 0.8 percent in November to the highest level since August 2008, according to Commerce Department data released Jan. 13.
Intel expects revenue to rise 10 percent this year, Chief Financial Officer Stacy Smith said in a Jan. 13 interview. The remarks came after the world’s largest maker of computer chips forecast first-quarter sales that may exceed analysts’ estimates. Santa Clara, California-based Intel had revenue of $43.6 billion in 2010, an increase of 24 percent from 2009.
“In 2011, everything gets better,” Paul Otellini, the company’s chief executive officer, said on a teleconference with analysts. “The economy is forecast to improve.”
