Fifth district manufacturing activity slowed further in April, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index fell nine points this month to -13 after falling ten points in March, marking the largest two-month decline since early 2022. This month's reading was worse than the forecast of -6.
Here is an excerpt from the latest Richmond Fed manufacturing report:
Of its three component indexes, shipments and new orders fell notably to -17 and -15, respectively, and employment fell slightly to -5 from -1.
The local business conditions index dropped from -13 in March to -21 in April, while the index for future local business conditions fell notably from -22 to -37. The future indexes for shipments and new orders fell considerably, with shipments decreasing from 7 to -20 and new orders falling from 6 to -26.
The vendor lead time index decreased to 1 in April, while the backlog of orders index fell notably from -1 to -24.
The average growth rate of prices paid increased notably. The average growth rate of prices received increased somewhat. Firms expected heightened growth in prices paid and prices received over the next 12 months.
Background on Richmond Fed Manufacturing
The complete data series behind today's Richmond Fed manufacturing report, which dates from November 1993, is available here. The Richmond Manufacturing Index is a gauge of manufacturing activity in the Fifth Federal Reserve District (Maryland, North Carolina, the District of Columbia, Virginia, most of West Virginia, and South Carolina) compiled from a survey of ~100 manufacturers. The composite manufacturing index is an average of indexes on shipments, new orders, order backlogs, capacity utilization, supplier lead times, number of employees, average work weak, wages, inventories, and capital expenditures. This is a diffusion index, meaning negative readings indicate contraction and worsening conditions, while positive ones indicate expansion and improving conditions. The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector for this region of the country and the accumulated results can help trace long-term trends.
