Fifth district manufacturing activity remained soft in June, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index rose two points this month to -7, remaining in negative territory for a fourth straight month. This month's reading was higher than the forecast of -10.
Here is an excerpt from the latest Richmond Fed manufacturing report:
Fifth District manufacturing activity remained soft in June, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index increased to -7 in June from -9 in May, remaining in negative territory. Of its three component indexes, shipments and new orders rose to -3 and -12, respectively, while employment edged down to -5 from -2.
The local business conditions index remained solidly negative but improved from -25 in May to -20 in June. The index for future local business conditions deteriorated from -6 to -11. The future indexes for shipments and new orders increased, with shipments edging up from 2 to 4 and new orders increasing from -3 to 5.
The vendor lead time index edged up to 16 in June, while the backlog of orders index ticked down from -19 to -20.
The average growth rates of prices paid and prices received increased in June. Firms expect growth in prices paid to moderate somewhat over the next 12 months and expect growth in prices received to increase further over the same period.
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.
