Manufacturing in New York state expanded in April at a pace that suggests factories are contributing to economic growth in the region, a Federal Reserve report showed.
The Fed Bank of New York's general economic index this month slipped to 15.8 from 29.0 in March, today's report showed. A number greater than zero signals a higher percentage of the manufacturers surveyed reported an improvement in business than deterioration. The index averaged 15.6 in 2005.
American manufacturers are likely to keep expanding in coming months as they rebuild depleted stockpiles and invest in new equipment, economists say. Busier factories, which account for 13 percent of the economy, will help the U.S. weather a slowdown in consumer spending.
``Inventories need to be accumulated, and that in itself will provide a strong push for production in the second quarter,'' Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts, said before the report. ``You are also seeing a broadening in demand outside the U.S., and that is providing more juice, or fuel, for business investment.''
Economists had expected the New York Fed's index would register a reading of 24.3, based on the median of 39 forecasts in a Bloomberg News survey. Forecasts ranged from 20 to 36.5. New York state accounts for almost 5 percent of U.S. manufacturing.
The new orders index dropped to 14.1 from 27.0. Unfilled orders fell to minus 2.9 this month from 13.2, and the shipments index dropped to 14.0 from 36.5 last month. The Fed bank's index of inventories fell to 1.6 this month from 8.6.
An index of prices received by factories increased to 14.5 this month from 12.8 in March. The index of prices paid for raw materials declined to 37.9 from 39.3.
Production at U.S. factories, mines and utilities grew at a faster pace last month and manufacturers were the busiest in more than five years, a Fed report last week showed.
Manufacturers are boosting production as demand improves because inventories are lean. Businesses had enough goods on hand in February to meet 1.26 month's worth of sales at the current pace, the second-fewest on record, the Commerce Department said last week.