Richmond Fed Manufacturing Index Plunges More Than Expected

MOUNT STORM, WEST VIRGINIA - AUGUST 22: Turbines from the Mount Storm Wind Farm stand in t
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Factory activity in the U.S. central Atlantic region fell back into contraction in August, according to a survey from the Federal Reserve Bank of Richmond released Tuesday.

The Fifth District Survey of Manufacturing Activity’s index fell to minus 8 in August after hitting zero in July. The index posted negative readings in June and May.

Economists expected the indicator to come in at minus three.

The Richmond Fed produces the index each month based on surveys of manufacturing firms across the Fifth Federal Reserve District, which covers the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.

Negative readings indicate a decline in activity.

The New York Fed said last week that its Empire State survey had plunged deep into negative territory, falling 42.4 points to minus 31.3.  The Federal Reserve Bank of Philadelphia, on the other other hand, said its index of general business conditions in the region rose into positive territory after two negative months.

Two of the three component indexes which form the headline composite indicator declined. The index tracking the volume of new orders fell from -8 to -20, indicating a substantial drop in demand. The index tracking shipments fell from positive seven to negative 10.

The employment index, however, moved up and the wage index remained elevated.

The Richmond Fed said there was further indication of further supply chain relief as the indexes for vendor lead time and backlog of orders decreased again in August.

The average growth rate of prices paid was “virtually flat.”  The average growth rate of prices charged for finished goods, however, moved higher, suggesting increased consumer inflation pressure. Expectations for inflation moved down further.


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