Manufacturing Expands At A Faster Pace In The New York Area (GE)

Bloomberg reported that New York Fed. Bank’s general economic index rose to 24.9 in February from 15.9 in January. It beat expectations as economists estimated the index to reach 18 in February. This signals that manufacturing in the New York region has grown at the fastest pace in the last four months.

As business, and consumer spending increases, and exports rise, manufacturers are building up inventories. This factory expansion may continue in the coming months, leading to increased hiring, and better income levels.

Stock-index futures rose and Treasury securities fell. Futures on the S&P 500 index, expiring in March gained 0.5% to 1,084.2 in New York. The yield on the 10-year Treasury note increased by 3 basis points to 3.72% as trading resumed after the yesterday’s Presidents’ Day holiday.

The New York Fed.’s employment barometer increased to 5.6 in February from 4 in January. The six-month outlook for new orders, and shipments increased. The gauge of orders rose to 55.6, the highest since February 2006, from 52.

A measure of sales also increased to 55.6, the highest since January 2006.The inventory index increased from minus 17.3 to zero in February, indicating that companies were not depleting inventories for the first time since August 2008.

A gauge of prices paid decreased from 32 to 31.9, while prices received increased from 2.7 to 4.2. The six month outlook worsened from 56 to 52.8., according to the Fed. report.

Another Fed. report that will be released tomorrow is expected to show that industrial production rose in January, marking this the seventh consecutive rise. The Commerce Department reported on Jan.29 that purchase of equipment, and software increased by 13% in Q4. Inventory stockpiling and investment in equipment, and software are fuelling expansion, and helping the US economy to recover from recession.

In keeping with the positive outlook, General Electric Co. (NYSE: GE), the world’s biggest maker of power-plant turbines, announced plans to acquire smart-grid products, and increase research in this area as utilities are looking at more efficient electricity management. 55% of GE Transmission and Distribution division’s revenue comes from North America. It is making efforts to expand its revenue base outside the US. It is specially targeting China, as the growing Chinese economy is boosting demand for US products.

According to the Commerce Department data released last week, exports increased for the eighth consecutive month in December.