Manufacturing in New York Area Expands Less Than Forecast as Orders Slide

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Manufacturing in the New York region expanded less than forecast in August as orders and sales declined for the first time in more than a year.

The Federal Reserve Bank of New York’s general economic index rose to 7.1 this month from 5.1 in July. Economists forecast the measure would rise to 8, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.

Slower consumer spending and less inventory rebuilding may restrain manufacturing after the industry led the economy out of the worst recession in seven decades. A cooling of growth overseas may also signal fewer orders to U.S. factories in coming months.

“The manufacturing sector is beginning to cool off,” said John Herrmann, senior fixed income strategist at State Street Global Markets LLC in Boston. “The manufacturing sector has been a strong underpinning for GDP growth over the last five quarters. So, should that begin to moderate, as we think it will, we think GDP” will slow.

Estimates of the 48 economists surveyed by Bloomberg ranged from zero to 12.3. Manufacturers account for about 6 percent of New York’s economy.

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http://www.bloomberg.com/news/2010-08-16/manufacturing-in-new-york-area-expands-less-than-forecast.html

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