Manufacturing activity across the central Atlantic region of the U.S. unexpected improved in August, a report from the Federal Reserve Bank of Richmond showed Tuesday.
The Richmond Fed’s Survey of Manufacturing Activity’s August composite index jumped from 18 to 21, the third monthly gain.
Economists surveyed by Econoday had expected the index to decline to 12 after the better than expected rise in July. The result was so strong exceeded the top of the range of forecasts.
The index reflects results of surveys of manufacturing firms across the Richmond Fed’s territory, known as the Fifth District, which covers the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.
Positive readings signal expansion, while negative readings indicate contraction.
The index plunged to negative 53 in April and did not return to positive territory until July.
The new orders and employment components for the index improved. The gauges for the number of employees and the average work week also improved.
Capital spending and plans for capital spending moved up. The measure of expectations for local business conditions more than doubled and the measure of current conditions also improved.
“Survey results also reflected improvement in local business conditions and increased capital spending. Overall, respondents were optimistic that conditions would continue to improve in the next six months,” the Richmond Fed said.
For the second consecutive month, firms said they were struggling to find workers with the necessary skills.
A similar survey from the New York Fed last week also showed evidence that the economy is improving more rapidly than expected. The Philadelphia Fed’s survey was more mixed, showing that the expansion continued but at a slower pace.