“Manufacturing activity in the central Atlantic region expanded at a quicker pace in July,” according to the monthly business activity survey conducted by the Federal Reserve Bank of Richmond.
“The index of overall activity was pushed higher by stronger readings for shipments and new orders,” the survey says. “District contacts reported that new orders rose at the fastest rate since March 2004 and that the pace of hiring continued to exhibit more moderate weakness. Other indicators also suggested generally stronger activity. Backlogs inched lower, while vendor delivery times edged higher and capacity utilization increased notably. In addition, manufacturers reported considerably slower growth in inventories.”
The manufacturing index increased to 14 in July from 6 in June.
Shipments jumped to 16 from 2, the Fed reported. Volume of new orders gained to 24 from 16, while the backlog of orders index slipped to 4 from 8.
The capacity utilization index rose to 14 from 7 and the vendor lead time index improved to 2 from zero. The number of employees index gained to negative 5 from negative 6, the average workweek index rose to 14 after an 8 reading last month, and the wages index slipped to 8 from 9.
As the outlook six months from now, the shipments index was 27, up from 23, the volume of new orders index rose to 29 from 23, and backlog of orders stayed at 11. Capacity utilization gained to 19 from 17, the vendor lead time index rose to 4 from 3, the number of employees index decreased to 1 from 3, the average workweek index dropped to zero from 9, and the wages index increased to 5 from 1. The capital expenditures index was 1, unchanged from last month.
“Activity in the service sector weakened in July. Survey respondents at service-providing firms indicated that revenues fell, although the decline was less widespread than a month ago,” according to the bank’s service-sector activity survey.
“Retailers reported a drop in sales revenues, with big-ticket sales collapsing in July. Shopper traffic also fell sharply this month. In addition, retail establishments reduced inventories, as merchants’ outlook for sales in the six months ahead remained subdued. However, contacts at services firms were generally optimistic about expected customer demand for their services over the next six months.”