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The December Richmond Fed Manufacturing Index is out and it’s a miss.The headline number fell to 5 from 9 in November. Economists were looking for a reading of 8.
“Looking at the broad indicators of activity, new orders were virtually unchanged, shipments grew more slowly, and employment declined,” wrote the Richmond Fed. “Other indicators were mixed. Capacity utilization turned positive, while backlogs fell further. Moreover, the gauge for delivery times inched higher, while finished goods inventories grew at a slightly slower pace and growth in raw materials inventories edged higher.”
The survey tracks manufacturing activity in the central Atlantic region of the U.S.
Here’s some more colour from the report:
In December, the seasonally adjusted composite index of manufacturing activity—our broadest measure of manufacturing—lost four points, settling at 5 from November’s reading of 9. Among the index’s components, shipments fell five points to 6, the gauge for new orders was almost unchanged at 10, and the jobs index turned negative, losing six points to -3.
Other indicators varied. The index for capacity utilization moved higher, adding six points to 3, while the backlogs of orders slipped two points to end at -11. The delivery times index picked up three points to 3, while our gauges for inventories were mixed in December. The raw materials inventory index gained three points to finish at 24, while the finished goods lost seven points to12.
labour market conditions edged lower at District plants in December. The manufacturing employment index turned negative, losing six points to settle at -3, and the average workweek indicator lost four points to end at -2. However, the wage index held steady at 10.
In the current survey, contacts were generally less optimistic about their future business prospects than they reported a month ago. The index of expected shipments lost eight points, ending at a reading of 20, and the new orders index dropped thirteen points to finish at 12. Backlogs moved down nineteen points to 0 and capacity utilization fell eight points to 4. Vendor lead-time declined thirteen points to -3, while readings for planned capital expenditures added five points to end at 9.
District manufacturers’ hiring plans were mixed in December. The index for expected manufacturing employment gained two points to finish at 2, while the average workweek indicator fell eleven points to -5. Furthermore, the index of expected wages shed seven points to end at 21.
District manufacturers reported that raw materials prices increased at an average annual rate of 2.01 per cent, in line with November’s reading of 1.99 per cent. Finished goods prices rose at a 1.57 per cent pace, slightly below November’s reading of 1.72 per cent.
Looking forward, respondents on average expected that the prices they pay will advance at a 2.54 per cent pace, somewhat above November’s outlook of 1.95 per cent. Contacts looked for finished goods prices to increase at a 0.87 per cent annual rate, slightly below last month’s expectation for a 1.29 per cent pace.
[credit provider=”Richmond Fed” url=”http://www.richmondfed.org/research/regional_economy/surveys_of_business_conditions/manufacturing/”]