Richmond Fed: Manufacturing growth moderate; prices accelerate
Manufacturing growth in the central Atlantic region “expanded moderately in October,” according to the monthly business activity survey conducted by the Federal Reserve Bank of Richmond, as the manufacturing index fell to 15 from 29.
Index readings above zero show expansion, while numbers below zero indicate contraction.
“While the employment index rose in October, the indexes for wages and workweek dropped but remained positive, indicating continued but weaker growth,” the survey noted. “Firms were unable to find workers with skills they needed, as the skills index dropped to an all-time low of −22. Respondents expect this struggle to continue in the next six months.”
Additionally, prices paid and received accelerated in the month. “Growth of prices paid continued to outpace growth of prices received and hit its highest rate since May 2011,” according to the release. “Firms expect price growth to continue in the near future.”
Shipments dropped to 7 from 33, the Fed reported. Volume of new orders slid to 20 from 34, while the backlog of orders index declined to 13 from 20.
The capacity utilization index remained at 20, while the vendor lead time index slumped to 23 from 32. The number of employees index grew to 19 from 16, the available skills fell to negative 22 from negative 11, while the average workweek index decreased to 16 from 19 last month, and the wages index fell to 28 from 33.
As for future outlook (six months from now), the shipments index was 49, up from 43 last month, while the volume of new orders index increased to 43 from 37, and backlog of orders fell to 21 from 26. Capacity utilization slid to 36 from 40, the vendor lead time index dropped to 20 from 29, the number of employees index grew to 33 from 23, the available skills fell to negative 25 from negative 12, while the average workweek index increased to 15 from 12 last month, and the wages index rose to 59 from 45. The capital expenditures index rose to 38 from 29.
The current trend in prices paid soared to 5.68 in October from 3.47 in September, while growing to 2.84 from 1.93 for prices received. The expected trend for the next six months gained to 3.87 from 3.04 for prices paid, and rose to 2.66 from 2.37 for prices received.
All firms surveyed are located within the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.