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Business Title: Manufacturing Expansion in Philadelphia Area Slows June 17 (Bloomberg) -- Manufacturing in the Philadelphia region expanded in June at a slower rate than forecast as a measure of factory employment contracted for the first time in seven months. The Federal Reserve Bank of Philadelphia’s general economic index dropped to 8, a 10-month low, from 21.4 in May. Readings above zero signal growth in the regional gauge, which covers eastern Pennsylvania, southern New Jersey and Delaware. Economists forecast the measure would fall to 20, according to the median projection in a Bloomberg News survey. Manufacturing, which led the economy out of the worst recession since the 1930s, is easing into a more sustainable pace of growth as the need to replenish inventories becomes less pressing. The figures stand in contrast to a report this week showing New York factories expanded at a faster rate. “Manufacturing still seems to be in a modest expansion,” said David Sloan, a senior economist at 4Cast Inc. in New York. His forecast of 10 was the lowest in the Bloomberg survey. “The fact that employment dipped suggests manufacturing growth is not that strong.” Stocks fell after the report, with the Standard & Poor’s 500 Index dropping 0.7 percent to 1,107.29 at 10:27 a.m. in New York. The yield on the 10-year Treasury note declined to 3.2 percent from 3.26 percent late yesterday. Jobless Claims The figures follow a report from the Labor Department today that showed consumer prices fell in May for a second month. The Labor Department also said jobless claims rose by 12,000 to 472,000 last week, a sign companies are still trimming payrolls. Economists surveyed by Bloomberg projected 450,000 new claims, according to the median forecast. Estimates in the survey of 58 economists for the Philadelphia Fed index ranged from 10 to 24. The Fed bank’s shipments gauge dropped to 14.2 from 15.8 in May. The new orders measure rose to 9 from 6.1. The employment index declined to minus 1.5 from 3.2 in April. Factories nationally have added 126,000 workers to their payrolls this year, according to Labor Department data. The Philadelphia Fed’s index of prices paid decreased to 10 from 35.5 in May. Prices received declined to minus 6.5 from 3.5. The inventory index rose to 4.6 from minus 7.9, signaling factories are adding to stockpiles. The overall Philadelphia Fed index isn’t composed of the individual measures, so some economists consider it a gauge of sentiment among manufacturers. New York Manufacturing Figures from the New York Fed two days ago showed factories in that region expanded in June at a faster rate than the previous month. The so-called Empire State Index rose to 19.6 from 19.1. Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management figures on U.S. manufacturing during the month. That report will be released July 1. The ISM’s manufacturing gauge fell in May from the previous month’s level, which was the highest in almost six years. Trade is helping spearhead the factory rebound. U.S. exports have risen 10 of the 12 months through April, boosted by surging growth in emerging Asian and Latin American countries, according to figures from the Commerce Department. Wilmington, Delaware-based DuPont forecasts its sales in emerging markets will grow in two years to about $12 billion, or 35 percent of its total sales, from about 30 percent last year, Chief Financial Officer Nicholas Fanandakis said June 8 at an industry conference in New York. DuPont Sales “As you continue to see the growth in population and consumerism, the increase in the middle class, the need for products and services increases, and DuPont is extremely well positioned to take advantage of that growth opportunity” in such countries ranging from China to Brazil, he said. The U.S. grew at a 3 percent annual rate in the first quarter, helped by the biggest increase in consumer spending in three years and a 13 percent rise in business investment in new equipment, the Commerce Department said last month.
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