Philadelphia Manufacturing Expands Most This Year
Courtesy of Maulik Mody – Bondsquawk.com
Fueling the early rally in stocks besides talks of Ireland bailout was the Philadelphia Fed’s reports which showed that manufacturing in that region expanded much more than forecasted in November. The Federal Reserve of Philadelphia’s general economic index jumped from 1.0 in October to 22.5 this month, its highest level this year. Economists had forecasted a rise to 5.0 this month. Readings above zero indicate an expansion in manufacturing activity. The reports come in as a surprise especially since manufacturing in New York region was reported to have contracted earlier this week.
The rise in the index was mainly a result of a jump in new orders and shipments. New orders hiked to 10.4 after being negative last month. Shipments increased to 16.8 from 1.4 in October. Prices paid component also increased slightly to 34.0. The gauge for the number of employees also increased to 13.3 from 2.4 last month. All components of the index showed improvement this month. “The survey’s index for future prices showed continued increases this month” the report said.
The Labor Department reported that the number of workers filing for unemployment was lesser than expected in the week ended Nov 13. Initial jobless claims increased 4K to 439K, but missed estimated of an increase to 441K according to the reports released in Washington. Although lower than expected, jobless numbers remain relatively high and do not indicate any improvement in the job market. This reading pulls down the 4-week moving average to 443K, which is still way above tolerable levels. The number of citizens who continued to file jobless claims decreased 6000 to 4295K, in line with expectations.
Among other releases, The Conference Board’s leading index gained 0.5% for a second month in October. The index is a gauge of the leading economic indicators in the US. Some contributors to the leading index include jobless claims, consumer goods orders, building permits, stock prices and M2 money supply etc.
Stocks retained gains as investors were optimist that Ireland was close to accepting the bailout. As a result, the Euro strengthened and commodity prices gained. The S&P gained 1.7% and was just shy of reaching 1200. NASDAQ gained 1.9% and was last seen at 2522. Treasury yields rose on eased concerns of the Irish economy and on improved manufacturing reports. The benchmark 10-Yr note gained 6 bp to 2.94%. The 5-Yr fell the most as its yield increased 7 bp to 1.54%.
