By Bob Willis
Dec. 1 (Bloomberg) -- Manufacturing in the U.S. probably expanded in November for a fourth consecutive month, putting factories at the forefront of the recovery, economists said before reports today.
The Institute for Supply Management’s manufacturing index fell to 55 from October’s three-year high of 55.7, according to the median forecast of 72 economists surveyed by Bloomberg News. Other reports may show pending sales of existing homes and construction spending declined in October.
Growing exports and lean inventories may keep manufacturing growing into 2010, helping drive the economic expansion. Factory production, which rose at the fastest pace in a quarter century in the three months through September, will probably climb at a slower pace in coming months as mounting unemployment restrains American consumers.
October was “strong by historical standards,” said Michael Moran, chief economist at Daiwa Securities USA Inc. in New York. “Such results seem out of line with the moderate pace of growth in the economy and corrections are likely to unfold.”
The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time. Forecasts ranged from 53.5 to 57. Fifty is the dividing line between expansion and contraction. Manufacturing accounts for about 12 percent of the economy.
Factory output increased 3.4 percent from July through September, the biggest three-month gain since 1984, according to figures from the Federal Reserve.
Government Help
Government-assisted rebounds in housing and auto-making, two of the most depressed areas during the recession, contributed to the initial burst of activity. Reports today may show those areas are now stabilizing.
Pending homes sales fell 1 percent in October, the first decrease in nine months, according to the survey median ahead of a report from the National Association of Realtors at 10 a.m. in Washington. Cars and light trucks probably sold at a 10.5 million annual pace last month, little changed from October, industry figures may show.
President Barack Obama last month signed legislation extending a first-time homebuyers credit through April, and expanded it to include to current owners. The $8,000 tax credit gave home sales and construction a lift for much of this year.
Also at 10 a.m., a Commerce Department report may show spending on construction projects fell 0.5 in October after rising 0.8 percent a month earlier, according to the survey median.
Rising Stocks
The Standard & Poor’s 500 Index gained 5.7 percent in November, capping a 62 percent increase since it reached a 12- year low March 9, on prospects the economy was recovering.
Other manufacturing surveys have shown improvement. The Institute for Supply Management-Chicago Inc.’s business barometer rose in November to 56.1, its highest level since August 2008, the group said yesterday. Gains in the gauges for new orders and backlogs signaled the recovery will persist.
Regional Fed Bank reports last month showed manufacturing in the New York district expanded in November for a fourth month and grew in the Philadelphia region at the fastest pace in more than two years.
General Motors Co. is among auto companies leading the rebound in output after emerging from bankruptcy. Sales are now stabilizing after slumping in September following the expiration of the government’s “cash-for-clunkers” incentives.
Auto Sales
“The encouraging thing for the industry and for GM is that this is being accomplished now without either ‘cash for clunkers’ or any federal stimulus,” Michael DiGiovanni, GM’s sales analyst, said on a conference call on Nov. 19. “Our sales appear to be right on target.”
Economists surveyed by Bloomberg at the beginning of November forecast the economy would grow at a 3 percent pace in the last three months of the year, following a 2.8 percent pace in the third quarter.
A rebound in global growth and a 16 percent drop in the dollar since March against a basket of six major trading partners is helping spur demand from abroad. Exports climbed 9.4 percent in the five months through September, the biggest such gain since comparable records began in 1992, according to figures from the Commerce Department.
Bloomberg Survey
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ISM ISM Construct Pending
Manu Prices Spending Homes
Index Index MOM% MOM%
===============================================================
Date of Release 12/01 12/01 12/01 12/01
Observation Period Nov. Nov. Oct. Oct.
---------------------------------------------------------------
Median 55.0 65.0 -0.5% -1.0%
Average 54.9 64.6 -0.5% -0.8%
High Forecast 57.0 67.0 0.5% 6.5%
Low Forecast 53.5 60.0 -2.8% -5.0%
Number of Participants 72 17 49 35
Previous 55.7 65.0 0.8% 6.1%
---------------------------------------------------------------
4CAST Ltd. 54.5 --- -0.6% 2.5%
Action Economics 55.0 66.0 -0.8% 0.0%
Aletti Gestielle SGR 55.2 63.0 --- ---
Ameriprise Financial Inc 54.5 60.0 -0.6% -3.7%
Bank of Tokyo- Mitsubishi 54.7 --- -0.6% ---
Bantleon Bank AG 56.0 --- --- ---
Barclays Capital 56.0 --- -0.2% -3.0%
Bayerische Landesbank 54.4 --- --- ---
BBVA 55.8 65.5 -0.5% 1.0%
BMO Capital Markets 55.0 65.0 0.0% -1.0%
BNP Paribas 56.0 --- 0.2% ---
BofA Merrill Lynch Resear 55.0 --- 0.3% ---
Briefing.com 54.0 --- -0.7% -3.0%
C I T I C Securities 55.0 --- --- ---
Calyon 54.8 --- --- ---
Capital Economics 56.0 --- -0.5% -5.0%
CIBC World Markets 55.0 --- --- ---
Citi 54.0 65.0 -0.6% ---
ClearView Economics 56.2 67.0 0.3% 6.5%
Commerzbank AG 55.5 --- --- -2.0%
Credit Suisse 56.0 63.0 -1.0% ---
Daiwa Securities America 54.0 65.0 -1.5% ---
Danske Bank 55.7 --- --- ---
DekaBank 54.8 --- -0.6% -2.0%
Desjardins Group 54.0 --- -0.5% ---
Deutsche Bank Securities 54.5 --- 0.5% 3.0%
Deutsche Postbank AG 54.8 --- --- ---
DZ Bank 55.3 --- --- 2.0%
First Trust Advisors 54.7 --- -0.2% ---
Fortis 55.5 --- --- 2.5%
FTN Financial 54.0 --- --- ---
Goldman, Sachs & Co. 55.0 --- -0.6% ---
Helaba 54.8 --- --- ---
Herrmann Forecasting 55.9 63.6 -0.3% 1.2%
High Frequency Economics 57.0 --- -1.0% -5.0%
IDEAglobal 56.0 66.0 -0.4% -0.5%
IHS Global Insight 53.5 --- -0.4% ---
Informa Global Markets 53.5 --- -2.8% -1.0%
ING Financial Markets 54.6 65.0 -0.4% -3.0%
Insight Economics 55.0 --- 0.3% -2.0%
Intesa-SanPaulo 54.7 --- -0.6% ---
J.P. Morgan Chase 53.5 --- -0.5% -1.0%
Janney Montgomery Scott L 54.0 --- -0.4% -0.2%
Jefferies & Co. 54.0 --- -0.7% ---
Johnson Illington Advisor 54.0 --- --- ---
Landesbank Berlin 54.5 --- -1.2% ---
Landesbank BW 54.5 --- -0.5% ---
MFC Global Investment Man 56.0 66.0 -0.3% ---
Moody’s Economy.com 54.1 --- -0.5% -3.0%
Morgan Keegan & Co. --- --- -0.4% ---
Morgan Stanley & Co. 55.0 --- -0.3% ---
National Bank Financial 55.5 --- --- ---
Natixis 55.2 --- --- -3.0%
Nomura Securities Intl. 54.5 63.0 --- ---
PNC Bank 56.0 --- 0.0% ---
Prestige Economics 56.0 --- --- ---
Raiffeisen Zentralbank 56.0 67.0 --- 3.0%
Raymond James 54.6 --- -1.0% ---
RBC Capital Markets 54.6 --- --- ---
Ried, Thunberg & Co. 55.0 --- -0.8% -1.0%
Schneider Foreign Exchang 54.0 63.0 0.3% -0.9%
Societe Generale 55.0 --- --- -4.0%
Standard Chartered 55.0 --- --- 0.4%
Stone & McCarthy Research 53.8 --- -0.6% ---
TD Securities 54.0 --- --- -2.0%
Thomson Reuters/IFR 55.0 --- -0.4% 2.0%
UBS 55.0 --- 0.0% -2.5%
UniCredit Research 54.0 --- --- ---
University of Maryland 55.0 65.8 -0.4% 0.5%
Wells Fargo & Co. 53.6 --- -0.2% ---
WestLB AG 55.0 --- -0.4% ---
Westpac Banking Co. 54.0 --- -1.2% -4.0%
Wrightson Associates 55.0 --- -0.8% -1.0%
===============================================================
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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