Washington, April 19 (Bloomberg) -- Manufacturing in the Philadelphia areacontracted in April at a slower pace for the third month in a row, a sign theworst may be over for factories, a regional survey showed. The Philadelphia Federal Reserve Bank's general economic index rose tominus 7.2 this month -- the highest since December - - from minus 23.5 inMarch. The increase in the index followed a report Tuesday from the Fedshowing an unexpected increase in industrial production nationwide. ``It does seem that manufacturing is improving,'' said Henry Willmore, senioreconomist at Barclays Capital Group in New York. ``We are probably stillgoing to see some job losses and declines in industrial production but theywill be smaller than what we saw earlier this year.'' While this is the third consecutive increase from January's minus 36.8reading, the lowest since December 1990, a negative reading indicatesdeclining activity. Before the report, analysts expected the index to rise to minus 20 from thepreviously reported minus 23.5 reading in March, according to the median in aBloomberg News survey. A separate report from the Labor Department showed jobless claims fell lastweek from the highest level in five years. First- time jobless claims fell by10,000 to 385,000 in the week ending April 14. The Philadelphia Fed also said that beginning in June, the general economicindex will be released at 12 p.m. Washington time, on the third Thursday ofeach month. The index measuring the outlook for six months from now rose to 25.7 in Aprilfrom 20.9 in March. The index measuring the outlook for employment rose17.8 from the prior month's 0.9.
New Orders
The new orders index fell to minus 3.9 in April from minus 3.1 in March. Theunfilled orders index rose to minus 18.9 from minus 19.2. The shipmentsindex rose to 1.3 from minus 3.6. The employment component fell to minus12.9 from minus 6.3 the previous month. An index of prices paid for raw materials fell to 7 in April from 15.2 in March.The April prices-paid index is the lowest since 3.4 in May, 1999. Pricesreceived fell to minus 8.4 from minus 3.6 the previous month. Fed policy makers reduced interest rates a half-percentage point yesterday toboost the economy. While central bankers said in their statement followingthe rate reduction that ``a significant reduction in excess inventories seemswell advanced,'' the rate cut was necessary to help bolster business andconsumer spending.
Federal Reserve
Fed officials also signaled concern about the stock market's recent decline onconsumption and about sluggish growth in overseas economies. Centralbankers cut the federal funds rate to 4.5 percent, the lowest in more than sixyears. The Philadelphia Fed report tracks manufacturing in eastern Pennsylvania,southern New Jersey and all of Delaware. Investors monitor it closely becauseit is the first report for the month of April to measure U.S. manufacturingactivity, which accounts for about a fifth of U.S. economic production. Dupont Co., based in Wilmington, Delaware, said earlier this month it will cut4,000 jobs, or 4 percent of its workforce, as the market for clothing slowedand global competition increased. As a result, the largest U.S. chemicalcompany expects to save about $400 million a year by the end of 2002. About75 percent of the job cuts will be in the U.S. Exide Corp., the largest automotive-battery maker, said last month it will fire950 workers, 500 of those in the U.S., and close plants in Dunmore,Pennsylvania, and Burlington, Iowa, as automakers made fewer cars andtrucks. The Princeton-based company plans to take a $68 million pretaxcharge to pay for the moves. Still, auto manufacturing may be starting to recover. U.S. industrial productionrose last month for the first time in six months, Fed statistics showed thisweek. The 0.4 percent increase was led by a 9.4 percent rise in auto andtruck production and a 4.6 percent rise among makers of auto parts. The Philadelphia Fed indexes subtract the percentage of companies surveyedthat said their business is decreasing from the percentage reporting anincrease. A negative index means falling production, orders or prices.