Sandy rebuilding boosts manufacturing output
WASHINGTON — Manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter.
Other data on Wednesday showed a drop in new claims for jobless benefits, although they remained elevated because of superstorm Sandy, and only a marginal improvement in consumer sentiment.
Financial information firm Markit said its “flash,” or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. A reading above 50 indicates growth in the factory sector.
Still, economists cautioned against taking the reading at face value, as other gauges of manufacturing have looked softer, including readings for new orders and regional business sentiment surveys.
“We're still not exactly going gangbusters,” said Sarah Watt, an analyst at Wells Fargo in Charlotte. “The data point to modest growth.”
Economists expect growth will slow in the fourth quarter to a lackluster 1.6 percent annual rate from a 2.0 percent rate in the prior three months, according to a Reuters poll conducted on Nov. 15.
Some respondents in Markit's survey said efforts to rebuild after Sandy might have accounted for some of the increased demand.
The storm continues to make it more difficult to read the underlying health of the economy. Jobless claims surged after the deadly storm hit the East Coast on Oct. 29, but last week retraced about half of that rise. Factory output and retail sales contracted last month, largely as a result of the storm.
Most of these effects are expected to be temporary, but even taking that into account, the economy appears to be stuck in low gear. Europe's debt crisis is weighing on the global economy and U.S. businesses appear hesitant to increase hiring and investment with the government on course to slash the country's budget deficit next year.
“Stripping out the short-term boost from Sandy ... and (factory) output is probably flat,” said Paul Dales, an economist with Capital Economics in London. “That's unlikely to change much when the global economy is set to remain weak.”
The Labor Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 410,000. Sandy had driven first-time filings up by 90,000 in the prior week.
Economists said that while the still-high level of claims reflected the storm's impact, it also likely pointed to more fundamental problems in the jobs market.
“There appears to be a noticeable deceleration of growth in the fourth quarter,” said Peter Hooper, an economist at Deutsche Bank in New York. “It would not be surprising if some of the new jobless claims are due to underlying weakness,” he said.
Financial markets showed little reaction to the data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday on Thursday. U.S. stocks rose, while Treasury debt prices were down modestly.
The claims report covered the same week when the Labor Department collects data for its estimate on hiring in November. It suggested that report, due on Dec. 7, could prove soft, although not all analysts expect a significant storm impact. Nonfarm payrolls grew 171,000 in October.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Rossi: Steelers will make small strides this season
- Not to be left behind, speedy Steelers are on the fast track in NFL
- Starkey: Bucs still battlin’
- Steelers have plenty of new faces at wide receiver
- WPIAL coaches, QBs have concerns about using newly-approved footballs
- Monroeville firefighters hope hot photo calendar will help raise money
- Why Steelers will — or won’t — snap out of their funk
- Reputed leader of motorcycle gang returned to Pa. to face charges
- Arizona Uzi shooting that accidentally killed instructor ‘just stupid’
- Penguins GM insists new coach Johnston was no afterthought
- Yukon kennel founder jailed for allegedly threatening workers