By Courtney Schlisserman Jan. 21 (Bloomberg) -- Manufacturing in the Philadelphia region expanded in January for a fifth straight month, pointing to a factory rebound that is helping lead the economy out of the recession. The Federal Reserve Bank of Philadelphia’s general economic index fell to 15.2, lower than anticipated, from 22.5 in December. Readings greater than zero signal growth. Increases in exports and business investment, combined with a need to stabilize inventories, may promote further gains in manufacturing in early 2010. The report corroborates figures issued by the Fed Bank of New York last week that showed factories in that region accelerated, indicating the rebound is broad-based. “The manufacturing environment continues to slowly improve but we need to see end demand also continue to improve,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. Economists forecast the gauge would fall to 18, according to the median of 60 projections in a Bloomberg News survey. Estimates ranged from 5.6 to 28. Other reports today showed jobless claims unexpectedly rose last week, reflecting a backlog of applications from the year-end holidays, and the index of leading indicators climbed for the ninth consecutive month. More Employment The Philadelphia Fed’s employment index rose to 6.1, the highest level in almost two years, from 4.5 in December. The new orders measure fell to 3,2 from 8.3. Shipments declined to 11 from 14.9, which was the highest since December 2007. The index of prices paid dropped to 33.2 from 36.6 in December. Prices received climbed to 2.7 from 1.4. The gauge of expectations for the next six months increased to 43.3 from 35.9 last month. The overall index number isn’t composed of the individual measures, so some economists consider it a gauge of manufacturing sentiment. Last week, figures from the New York Fed showed business activity in that region expanded more than forecast in January. Another Fed report on Jan. 15 showed industrial production rose in December for a sixth straight month. The plant-use rate increased to 72 percent, the highest level in a year. Fed Meeting Fed policy makers are scheduled to next meet Jan. 26-27 to discuss the direction of the benchmark overnight lending rate between banks. Last month they repeated a pledge to keep borrowing costs “exceptionally low” for an “extended period” to help promote economic growth. 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. Even so, the company will continue for the time being to idle the smelting capacity it curtailed last year, he said. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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