Richmond Fed: Manufacturing weakens; shipments lowest since 2009

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Manufacturing growth in the central Atlantic region “weakened in December,” according to the monthly business activity survey conducted by the Federal Reserve Bank of Richmond, as the manufacturing index dropped to negative 8 from positive 14.

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

The index hadn’t been negative since September 2016.

Shipments plunged to negative 25, its lowest reading since April 2009, from positive 12, the Fed reported. Volume of new orders fell to negative 9 from positive 17, while the backlog of orders index reversed to negative 18 from positive 15.

The capacity utilization index declined to negative 16 from positive 9, while the vendor lead time index slumped to 14 from 35. The number of employees index rose to 14 from 11, the available skills widened to negative 28 from negative 26, while the average workweek index decreased to 3 from 11 last month, and the wages index slid to 31 from 34.

As for future outlook (six months from now), the shipments index was 19, down from 30 last month, while the volume of new orders index decreased to 15 from 27, and backlog of orders fell to zero from 1. Capacity utilization slid to 20 from 29, the vendor lead time index dropped to 4 from 22, the number of employees index dipped to 28 from 32, the available skills narrowed to negative 23 from negative 29, while the average workweek index decreased to 4 from 11 last month, and the wages index fell to 49 from 58. The capital expenditures index fell to 22 from 37.

The current trend in prices paid declined to 4.36 in December from 4.70 in November, while growing to 2.26 from 2.13 for prices received. The expected trend for the next six months decreased to 2.90 from 3.92 for prices paid, and dipped to 2.31 from 2.60 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