Fifth District manufacturing activity continued its expansion in April, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index stood at 14 in April compared to 13 in March. Shipments increased to 17 from 9, while the volume of new orders moved down slightly to 6 from 10. Despite expansionary activity, firms remained pessimistic about current business conditions. Additionally, survey participants expect business conditions to deteriorate in the next six months, which is the third time in the history of the survey that this expectations index has been negative — the other two times were at the beginning of the COVID-19 pandemic.

Order backlogs continued to increase in April, while vendor lead times remained high. Firms expect vendor lead times to continue increasing in the next six months. The index for finished goods and raw materials inventories remained low, and firms expected that to persist for the foreseeable future. Manufacturers continued to report growth in employment while experiencing challenges finding workers with the necessary skills. Our wage index increased to 41 in April from 37, and firms don't expect the increase in wages to let up.

The average growth rate of prices paid increased slightly in April while the growth rate of prices received from customers edged down slightly. Firms expect growth rates for both prices paid and prices received to decrease somewhat in the next 12 months