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Richmond Fed's Current Activity Index down 7 to -3
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Manufacturing activity in the central Atlantic region softened in June, following six months of moderate expansion, according to the Richmond Fed's latest survey. Looking at the main components of activity, shipments edged into negative territory as growth in new orders experienced notable declines and employment grew at a rate well below May's pace. Most other indicators also suggested weakening activity. District contacts reported that capacity utilization and vendor lead-time turned negative, while growth in order backlogs exhibited marked weakness. Manufacturers reported that finished goods inventories grew at a much quicker pace, while raw materials were nearly unchanged.
Despite the moderation in recent activity, assessments of business prospects for the next six months were in line with last month's readings. Contacts at more firms anticipated that shipments, new orders, backlogs, capacity utilization and capital expenditures would grow at a solid pace.
Survey assessments of current prices revealed that both raw materials and finished goods prices grew at a somewhat slower rate in June than a month ago. Over the next six months, respondents expected growth in raw materials prices to grow at a somewhat slower pace, while they expected price growth in finished goods to rise at a somewhat faster rate than they had anticipated last month.
In June, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — lost seven points to −3 from May's reading of 4. Among the index's components, shipments declined two points to −2, new orders dropped thirteen points to end at −12, and the jobs index moved down eight points to 8.
Most other indicators also suggested some weakening in activity. The capacity utilization and delivery times indicators both turned negative, losing ten points and seven points, respectively, finishing at −8, and −3. The backlogs index edged up two points to −16, while our gauges for inventories were somewhat higher in June. Indexes for finished goods inventories added seven points to end at 14, while raw materials inventories edged up one point to finish at 22.
Posted: June 26, 2012 Tuesday 10:00 AM