Fifth district manufacturing activity slowed in May, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index rose four points this month to -9 after falling nine points in April. This month's reading was consistent with the forecast.
Here is an excerpt from the latest Richmond Fed manufacturing report:
Fifth District manufacturing activity slowed in May, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index increased to -9 in May from -13 in April, remaining in negative territory. Of its three component indexes, shipments and new orders rose to -10 and -14, respectively, and employment edged up to -2 from -5.
The local business conditions index decreased from -21 in April to -25 in May, while the index for future local business conditions rose notably from -37 to -6. The future indexes for shipments and new orders increased substantially, with shipments rising from -20 to 2 and new orders increasing from -26 to -3.
The vendor lead time index increased to 15 in May, while the backlog of orders index increased from -24 to -19.
The average growth rates of prices paid and prices received were nearly unchanged in May. Firms expected heightened growth in prices paid and prices received over the next 12 months.
Background on Richmond Fed Manufacturing
The complete data series behind today's Richmond Fed manufacturing report, which dates from November 1993, is available here. The Richmond Manufacturing Index is a gauge of manufacturing activity in the Fifth Federal Reserve District (Maryland, North Carolina, the District of Columbia, Virginia, most of West Virginia, and South Carolina) compiled from a survey of ~100 manufacturers. The composite manufacturing index is an average of indexes on shipments, new orders, order backlogs, capacity utilization, supplier lead times, number of employees, average work weak, wages, inventories, and capital expenditures. This is a diffusion index, meaning negative readings indicate contraction and worsening conditions, while positive ones indicate expansion and improving conditions. The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector for this region of the country and the accumulated results can help trace long-term trends.
