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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (45431)	12/20/2001 1:04:59 PM
From: Sully-	Respond to of 65232

Mid-Atlantic Manufacturing Rebounds By Eric Burroughs NEW YORK (Reuters) - Manufacturing activity in the U.S. mid-Atlantic region rebounded sharply in December to its best level in five months, showing signs of a recovery in the hard-hit sector but still posting its 13th straight month of contraction, according to a Federal Reserve survey released on Thursday. The Federal Reserve Bank of Philadelphia said its monthly index of business conditions jumped to -5.5 in December from -20.2 in November, bouncing back from an eight-month low of -27.4 hit in October following the Sept. 11 attacks. Economists had forecast a rise to -16.2. Any reading below zero suggests shrinking activity. ``It's another indication that the manufacturing sector is getting a grip on itself. After the sharpest inventory correction in history this year, we are beginning to see the rates of decline in factory output stabilize and perhaps diminish,'' said Alan Levenson, chief economist at T. Rowe Price Associates in Baltimore. Manufacturing was one of the first sectors to bear the brunt of the U.S. economy's first recession in a decade, steadily contracting for more than a year and shedding 1.4 million jobs since July 2000. Economists are looking to the manufacturing sector for signs that the giant U.S. economy is poised for a solid rebound by mid-2002, as many are forecasting. Short-term U.S. Treasuries fell after the report, with investors seeing improvement in the economy. Stocks rose briefly after the report and then resumed their downward move. The Philadelphia Fed's current new orders index, closely watched as a gauge of future activity, rose solidly to -3.8 in December from -15.7 in November. Regional firms also cut down bloated inventories at a slower pace than in prior months, possibly setting the stage for future growth as production is ramped up. The inventories index rose to -12.5 from -14.1, its best level since May. ``If inventory liquidation has reached its maximum point and that pace is going to slow, that's good for production. If you want to stop cutting inventories so fast and demand doesn't change, you have to produce a little bit more than you were before,'' Levenson said. Purchasing managers in the Philadelphia Fed's district also grew more optimistic about future activity. The six-month outlook rose to 45.5 from 44.3 in November. Firms also were more upbeat on making capital investments in the coming six months, with the future capital expenditures index rising to 13.5 in December -- the highest level in a year -- from -1.2 in November. ``There were some early signs of a possible near end to inventory reductions and a slight improvement in capital expenditure plans in 2002,'' the report said. Last week the Fed said national industrial production shrank for the 13th time in 14 months but was better than expected due to a big ramp up in automobile production. But capacity utilization slipped to its lowest level since May 1983. The survey showed that firms are still shedding workers, with the employment index slipping to -23.2 in December from -23.1 in November. Nearly 32 percent of firms reported declines in employment, while only 9 percent reported increases, the report said. The Philadelphia Fed, one of the nation's 12 regional Fed banks, serves Delaware, eastern Pennsylvania and southern New Jersey -- a highly industrialized region that is considered a bellwether for national manufacturing activity. Its Business Outlook Survey is a diffusion index compiled by subtracting the number of companies reporting decreases from those reporting increases. biz.yahoo.com