Research >> Economics
Richmond Fed's Current Activity Index gained 3 points to a reading of -8
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Manufacturing activity in the Fifth District continued to soften in September, but somewhat less so than in August, according to the Richmond Fed's latest survey. New orders and shipments decreased this month at a slower pace, while backlogs decreased at about the same pace as last month. Hiring activity weakened across firms and wage increases were less widespread. Although raw materials prices rose at a somewhat faster pace in September, prices of finished goods barely increased in the month.
Looking ahead six months, producers' expectations about future business conditions have softened compared to last month's readings. Manufacturers expected softer growth in shipments and in the volume of new orders as well as backlogs of orders. Fewer survey participants expected vendor lead times to lengthen. Expectations for increased capacity utilization softened somewhat.
Manufacturing firms anticipate more modest hiring and continued wage increases in the months ahead. Firms expected faster growth in prices received and prices paid in the next six months.
Overall manufacturing activity, as measured by the composite index, gained three points but continued to indicate some contraction, with a reading of −8 following last month’s reading of −11. The indicators for shipments and new orders increased this month but remained negative. The index for shipments gained 10 points, ending at a reading of −4, while the index for new orders rose 13 points to −7. In contrast, the manufacturing employment index fell into negative territory for the first time in three years, with a reading of −13.
The extent of weakness in capacity utilization across firms eased somewhat in September, as the index gained eight points to end at a reading of −11. The index for order backlogs was little changed with a reading of −20, following last month's reading of −21. The vendor lead time indicator remained positive and unchanged at 5. Indicators for inventories were somewhat lower in September but still positive, suggesting that inventory increases were a little less widespread compared to a month ago. The raw materials inventory index fell two points to 25 and the finished goods inventory index fell by four to 20.
Posted: September 27, 2016 Tuesday 10:17 AM