Richmond Fed: Manufacturing ‘soft’ in Jan.; backlog of orders lowest since 2009

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Manufacturing growth in the central Atlantic region “was soft in January,” according to the monthly business activity survey conducted by the Federal Reserve Bank of Richmond, as the manufacturing index climbed to negative 2 from negative 8.

Index readings above zero show expansion, while numbers below zero indicate contraction.

The index, which hadn’t been negative since September 2016, has been in the red the past two months.

Shipments rebounded to negative 8 from negative 25, the Fed reported. Volume of new orders fell to negative 11 from negative 9, while the backlog of orders index slid to negative 21 from negative 18.

The capacity utilization index reversed to positive 3 from negative 16, while the vendor lead time index slumped to 4 from 14. The number of employees index rose to 19 from 14, the available skills narrowed to negative 12 from negative 28, while the average workweek index remained at 3, and the wages index held at 31.

As for future outlook (six months from now), the shipments index was 29, up from 19 last month, while the volume of new orders index surged to 31 from 15, and backlog of orders rose to 5 from zero. Capacity utilization stayed at 20, the vendor lead time index dropped to negative 9 from positive 4, the number of employees index dipped to 21 from 28, the available skills narrowed to negative 17 from negative 23, while the average workweek index increased to 7 from 4 last month, and the wages index dipped to 48 from 49. The capital expenditures index gained to 27 from 22.

The current trend in prices paid declined to 3.32 in January from 4.36 in December, while holding at 2.26 for prices received. The expected trend for the next six months decreased to 2.48 from 2.90 for prices paid, and dipped to 2.00 from 2.31 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.

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Economic indicators Manufacturing industry Federal Reserve Bank of Richmond