Sustained demand from stronger housing and auto sales is underpinning improvement in manufacturing, which accounts for about 12 percent of the economy. Stronger household balance sheets and inventory building by companies may help factories offset weaker global markets such as China and Europe.
“What you have is an uncertainty on general economics being largely balanced off by strength in two very, very critical sectors: housing and vehicles,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania said before the report.
Estimates in the Bloomberg survey ranged from 0.0 to 10.
Retail sales rose less than projected in June as demand cooled at building materials outlets and restaurants, underscoring a second-quarter slowdown in the U.S. economy, another report showed today.
Retail SalesThe 0.4 percent gain in purchases followed a 0.5 percent increase in May that was less than previously reported, according to Commerce Department figures. The median forecast of 82 economists surveyed by Bloomberg called for a 0.8 percent advance. Excluding the biggest jump in automobile purchases since November, sales were unchanged.
Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.3 percent to 1,680.19 at 8:45 a.m. in New York after data showed China’s economy grew as projected in the second quarter.
The Empire State gauge of new orders rose to 3.8 this month from minus 6.7 in June. A measure of shipments increased to 9 from minus 11.8, the lowest level in four years. A measure of factory employment improved to 3.3 from 0.
MSC Industrial Direct Co., a provider of office and industrial equipment, posted earnings and revenue that beat analysts’ estimates for the fiscal third quarter even as the company reported a weaker demand environment in the metalworking manufacturing sector.
‘Growing Confidence’“This isn’t 2008, 2009, but it’s very sluggish,” Erik Gershwind, chief executive officer of the Melville, New York-based company, said on a July 10 conference call, adding “discussions with supply chain executives at our key customers give me growing confidence that significant manufacturing growth is likely for North America over the next decade.”
Factory executives in the New York Fed region were more optimistic about the future in July than in the prior month. The gauge measuring the outlook six months from now climbed to 32, the highest since March, from 25.
“That’s a tremendously positive sign,” Naroff said. “They think that, even with rising interest rates, the economy has enough momentum to push through it.”
The majority of those polled this month, 65.2 percent, said they planned on making no or few changes to their workforces over the next year in response to the Affordable Care Act, according to results of a supplemental question.
Economists monitor the New York report and Philadelphia Fed factory readings, due Thursday, for clues about the Institute for Supply Management figures on U.S. manufacturing, scheduled for release Aug. 1.