By Vincent Del Giudice and Bob Willis Jan. 15 (Bloomberg) -- Manufacturing in the New York region expanded in January faster than anticipated, indicating gains in production are giving the economy a lift, a regional report showed today. The Federal Reserve Bank of New York’s general economic index rose to 15.9 from 4.5 in December. Readings above zero in the so-called Empire State Index signal manufacturing expansion in the state and parts of New Jersey and Connecticut. Recent figures suggest manufacturing nationwide is helping to pull the economy out of the deepest recession since the 1930s. Lean inventories combined with gains in consumer and business spending and exports will probably keep factories expanding early this year. “Restocking the store shelves is going to be the dominant theme for producers this year,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “Manufacturers are growing more confident that consumer demand for their goods is going to last.” The cost of living in the U.S. rose at a slower pace in December, indicating the economic recovery is showing few signs of stoking inflation, figures from the Labor Department also showed. The consumer-price index climbed 0.1 percent, less than forecast, following a 0.4 percent gain in November. Excluding food and energy costs, the so-called core index also increased 0.1 percent. Stock Futures Stock-index futures trimmed earlier losses after the reports and Treasury securities held gains. The contract on the Standard & Poor’s 500 Index was down 0.3 percent to 1,141.9 at 8:34 a.m. in New York. The yield on the benchmark 10-year note fell to 3.70 percent from 3.74 percent late yesterday. Economists forecast the New York Fed’s index would increase to 12 in January, according to the median of 55 projections in a Bloomberg survey. Estimates ranged from 5 to 20. The New York Fed’s gauge of new factory orders rose to 20.5 from 2.8, while a measure of shipments increased to 21.1 from 8.4. The inventory index improved to minus 17.3 from minus 18.4, showing a slower pace of drawdown, and a measure of employment increased to 4 from minus 5.3. Higher Prices A gauge of prices paid rose 32 from 19.7, while prices received increased to 2.7 from minus 9.2. A gauge measuring the outlook six months from now rose to 56 from 52.6, according to the Fed report. Earlier in the week, the Fed’s national economic survey, known as the Beige Book, signaled the recovery continues, with the New York region reporting “further signs of improvement since the last report, with indications of a modest pickup in the labor market.” Another Fed report today may show production rose in December for the fifth time in past six months, indicating manufacturing gave the economy a boost into 2010. Output at factories, mines and utilities probably increased 0.6 percent following a 0.8 percent November increase, according to the median forecast of 76 economists surveyed by Bloomberg News. A Commerce Department report yesterday showed business inventories rose 0.4 percent in November and sales advanced 2 percent. Companies had enough goods on hand to satisfy 1.28 months worth of purchases at the current pace, the lowest level since July 2008. More Exports Rising demand from overseas is also bolstering production. Exports increased for a seventh straight month in November, according to Commerce Department data released Jan. 12. New York-based Alcoa Inc., the largest U.S. aluminum maker, expects earnings to improve this year as global demand increases for the industrial metal, Chief Financial Officer Charles McLane said Jan. 12 in an interview. The company forecast global aluminum demand will gain 10 percent this year, led by China.

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