Manufacturers in the Philadelphia region are growing strongly this month, according to survey figures released yesterday, easing fears over the sector’s health.
Meanwhile, US existing house purchases rose to an eight-year high last month, showing that consumer spending was in fine fettle.
The Philadelphia Federal Index ticked up to a score of 8.3 this month from July’s 5.7, moving further above the zero mark that signals no change in business activity.
It counters the Empire State Index, which collapsed to levels normally seen in recession earlier this week. The Empire State Index is derived from a survey of manufacturers in New York State.
Ian Shepherdson from Pantheon Macroeconomics said the Philadelphia figure was “a pleasant surprise after the terrible Empire State survey”.
It had been feared that US manufacturers would have a tough year due to the strength of the dollar, which is making their exports less attractive in foreign markets. However, the strong dollar is also making imports cheaper, reducing the cost of manufacturers’ raw materials.
In a further sign of the strength of the economy, US consumers bought existing homes at an annual rate 5.59m units in July. It marks a climb of 9.3 per cent on the same month last year, the National Association of Realtors said yesterday. House prices are up 5.6 per cent on the year.
“The housing market continues to gain ground, which should help reassure the Fed [Federal Reserve] that the economy’s growth trajectory is strong enough to withstand the beginning of monetary renormalisation,” said John Ryding from RDQ Economics.
The US central is widely expected to lift interest rates for the first time since the 2008 financial crisis this year – either in September or December. Economists believe low oil prices and rising pay and employment will begin to seep through to spending, fuelling economic growth for the rest of the year.