Manufacturing New York expands

A gauge of activity hits the highest level in 5 year

Manufacturing activity in the New York region rose for the third month in a row in October, the New York Federal Reserve Bank said this morning.

The bank's Empire State Manufacturing Survey rose to a reading of 34.6 in October from 18.9 in September -- the highest level since 2004. Economists had been looking for the index to have declined to a reading of 17.3. Readings above zero indicate expansion in the sector.

"The worst is over for the factory sector, and the worst is over for the economy," Michael Gregory, a senior economist at BMO Capital Markets, told Bloomberg News. "Exports will increasingly be providing support to that sector. They're at expansionary levels, and that's the key."

Manufacturing makes up about 6% of New York’s $1.1 trillion economy.

The New York Fed's gauge of new orders rose to 30.8 from 19.8, while shipments rose to 35.1 from 5.3. The inventory index rose to a reading of negative 18.2 from negative 25, and the employment index rose to 10.4 from negative 8.3, the first time that index has been positive in more than a year.

The Philadelphia Fed also said this morning that its manufacturing index also showed expansion in October, although the reading was lower than economists had expected. The Philly Fed index came in at a reading of 11.5, down from 14.1 in September. The consensus estimate was for a reading of 12.2.