Manufacturing in the New York region expanded in January at the fastest pace in nine months, reflecting improving orders, sales and employment.
The Federal Reserve Bank of New York’s general economic index rose to 13.5, the highest level since April, from a revised 8.2 in December. That gauge exceeded the median forecast of 56 economists surveyed by Bloomberg News, which projected an increase to 11. Readings higher than zero signal expansion among companies in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
Factories may keep driving the economic expansion as they maintain production to meet household and business demand. At the same time, the financial crisis in Europe and a weaker euro may slow purchases of American-made goods.
“It’s a reflection of improvement in demand,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. “The pace of recovery has accelerated. We’re beginning to see signs that the economy is starting to build on the strong momentum that we saw at the end of last year.”
Stocks rose as China’s economy grew more the forecast and German investor confidence jumped by the most on record. The Standard & Poor’s 500 Index rose 1 percent to 1,301.77 at 9:45 a.m. in New York.
Survey Results
Estimates of economists surveyed ranged from 6.5 to 15. The headline index is based on a separate question and does not reflect changes in areas like orders and employment. For that reason, some economists consider it a measure of sentiment.
With today’s report, the New York Fed issued its annual revisions. The December figure was revised down from a previously reported 9.5.
The Empire State gauge of shipments rose to 21.7 from 20.1. New factory orders increased to 13.7 from 6 last month. A measure of the number of employees climbed to 12.1 from 2.3. All three indexes were at their highest levels since May.
Factory executives in the New York Fed’s district became more optimistic about the future, the report showed. The gauge of the outlook six months from now rose to a one-year high of 54.9 from 45.6.
“Manufacturing activity generally continued to expand, although the pace of growth has slowed for selected subsectors such as technology products,” the Federal Reserve said in its Beige Book anecdotal business survey released Jan. 11.
Some companies are boosting spending at U.S. factories.
Business Investment
Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury autos, will invest about $900 million in its South Carolina factory to expand capacity and prepare the facility to produce a new sport-utility vehicle.
The spending, to be completed by 2014, will help increase capacity at the plant in Spartanburg to 350,000 vehicles a year from the 276,100 autos made there last year, the Munich-based company said last week in a statement. BMW will make the new X4 SUV at the factory, adding to the X3, X5 and X6 models already assembled there.
