Manufacturing in Philadelphia Area Expands as Sales, Employment Increase

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Source: Bloomberg

By Vincent Del Giudice

Dec. 17 (Bloomberg) -- Manufacturing in the Philadelphia region expanded in December at the fastest pace in more than four years as sales and employment grew.

The Federal Reserve Bank of Philadelphia’s general economic index climbed to 20.4, higher than forecast, from 16.7 in November. Readings greater than zero signal growth and this month’s level was the highest since April 2005. Gains in orders slowed in December, limiting prospects for early 2010.

Manufacturers have benefited from renewed demand for exports as well as record declines in inventories following the worst recession since the 1930s. The report contrasts with a similar gauge issued by the Fed Bank of New York this week that showed manufacturing in that region slowed more than economists anticipated.

“The general state of manufacturing reflects improving inventory levels, business sentiment and capital expenditure outlays and very decent demand for exports,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey. “The economic recovery and the manufacturing recovery remain on track, with significant improvements expected for next year.”

Economists forecast the Philadelphia Fed index would fall to 16 for December, according to the median of 58 estimates in a Bloomberg News survey. Projections ranged from 6.9 to 20.3.

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