Fed surveys find manufacturing weak, mixed result for service sector

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Manufacturing activity contracted again in December, according to respondents to the Federal Reserve Bank of Richmond’s monthly survey.

The composite index declined to negative 5 after a negative 1 reading in November. The composite read was “weighed down by decreases in the already negative indexes for shipments and new orders, while the third component — employment — increased slightly,” the Bank reported. “Manufacturers also reported weakness in local business conditions and capacity utilization, but they were optimistic that conditions would improve in the coming months.”

The average workweek index slumped to negative 15, its lowest level since April 2009.

The current prices paid index suggested a 1.73% increase on an annualized basis, up from 1.55% the month before, while the prices received index rose 1.60% on an annualized basis, after gaining 1.80% the month before.

The future prices paid index suggested a 1.59% increase on an annualized basis, down from 1.73% the month before, while the prices received index gained 1.43% on an annualized basis, after a 1.48% increase the month before.

The Bank’s service sector survey showed strength in December, with the revenues and demand index both gaining. “Firms also saw improving local business conditions and increased spending,” the Bank said. “They were optimistic that conditions would continue to improve in the next six months.”

While the survey indicated employment and wages were higher, “finding workers with the necessary skills continued to be a challenge. Firms expected this challenge to continue and wages and employment to continue to grow in the near future.”

The current prices paid index suggested a 3.53% increase on an annualized basis, up from 3.09% the month before, while the prices received index gained 2.49% on an annualized basis, after a 2.16% gain the month before.

The future prices paid index suggested a 3.07% increase on an annualized basis, up from 2.51% the month before, while the prices received index gained 3.07% on an annualized basis, after a 2.11% gain the month before.

The Federal Reserve Bank of Philadelphia saw softening non-manufacturing activity in December, with indexes for general activity at the firm level, new orders, and sales/revenues declining, although remaining positive.

The index for general activity at the firm level slumped to 5.8 from 31.7 last month, while the index measuring activity in the region dropped to 13.4 from 20.7.

Despite those declines respondents were more positive about the outlook for six months from now, as the index for general activity at the firm level gained to 32.7 from 21.1, and the index measuring activity in the region rose to 58.0 from 47.2.

The prices paid index rose to 36.6 from 28.6 while the prices received index gained to 16.9 from 10.7.

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Economic indicators Manufacturing industry Federal Reserve Bank of Philadelphia Federal Reserve Bank of Richmond
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