Richmond Fed Shows Weak Manufacturing, Negative Jobs Trend

The Federal Reserve Bank of Richmond is out with its August report on manufacturing activity in the central Atlantic region. The report is a negative, but the Richmond Fed also noted that the contraction was at “a less pronounced rate this month, after deteriorating in July.” The seasonally adjusted survey reviewed activity and higher shipments, while a weakening was seen in employment with the weakness in new orders having moderated somewhat.

The index reading was -9 in August versus -17 in July, with shipments rising to +1 from -23, new order volumes of -20 versus -25 and backlog at -25 versus -27.

All employment components fell in August versus July: number of employees was -5 versus +1, average work week was -11 versus -7 and wages came in at +3 versus +9.

Order backlogs, capacity utilization and delivery times remained negative but were said to be improved from July readings. Finished goods inventories grew at a slightly slower pace, while growth in raw materials was nearly unchanged.

The outlook was fairly in-line with a prior report for the next six months anticipating steady growth in shipments, new orders and backlogs in the months ahead. The good news is that the firms surveyed also showed that capacity utilization is expected to grow more quickly.

JON C. OGG