Richmond Fed Collapses To -7


Photo: Flickr via taberandrew

UDPATE: The Richmond Fed Manufacturing index tumbled to -7 this month, well below expectations of a positive 5 reading.From the official release:


Manufacturing activity in the central Atlantic region pulled back in October after improving somewhat last month, according to the Richmond Fed’s latest survey. The seasonally adjusted index of overall activity was pushed lower as all broad indicators of activity — shipments, new orders and employment — were in negative territory. Other indicators also suggested additional softness. Capacity utilization turned negative, while backlogs remained negative but improved from its September reading. Moreover, the gauge for delivery times changed little, while raw materials inventories grew at a slightly quicker pace, and growth in finished goods edged lower.

Looking forward, assessments of business prospects for the next six months were less optimistic in October. Contacts at more firms anticipated that new orders, backlogs, capacity utilization, and vendor lead-times will grow more slowly than anticipated a month ago.

Survey assessments of current prices revealed that growth in both raw materials and finished goods prices grew at a somewhat quicker rate than a month ago. Over the next six months, respondents expected growth in both raw materials and finished goods prices to grow at a somewhat faster pace than they had anticipated a month earlier.

Current Activity

In October, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — lost eleven points to −7 from September’s reading of 4. Among the index’s components, shipments fell eighteen points to −9, new orders moved down thirteen points to finish at −6, and the jobs index held steady at −5.

Most other indicators also suggested weaker activity. The index for capacity utilization turned negative, losing seven points to −4, and the backlogs of orders gained six points to end at −3. Additionally, the delivery times index subtracted one point to −2, while our gauges for inventories were mixed in October. The raw materials inventory index rose six points to finish at 23, while the finished goods index fell three points to 15.

Activity Index
Shipments Index
New Orders Index

Employment labour market activity changed little from the modest contraction a month ago at Fifth District factories. The manufacturing employment index held steady at −5, while the average workweek indicator turned positive, gaining eight points to 3. Moreover, the wage index rose four points to 10. 

Employment Index

  Expectations In the current survey, contacts were generally less optimistic about their business prospects than reported a month ago. The index of expected shipments was virtually unchanged at 21, while the new orders index declined seven points to finish at 19. Backlogs reversed its 10-point gain realised in September to end at 6, and capacity utilization inched down four points to 19. Vendor lead-time moved down six points to 7, and readings for planned capital expenditures lost two points to 0.

District manufacturers’ hiring plans were somewhat more optimistic in October. The expected manufacturing employment index gained seven points to finish at 8, while the average workweek indicator changed little, losing one point to 10. Moreover, the index of expected wages rose four points to end at 25.


District manufacturers reported that raw materials prices increased at an average annual rate of 3.21 per cent, notably higher than September’s reading of 1.42 per cent. Finished goods prices rose at a 1.99 per cent pace, also somewhat higher than September’s reading of 0.44 per cent.

Looking forward, respondents on average expected that the prices they pay will advance at a 2.55 per cent pace, markedly above September’s reading of 1.33 per cent. Contacts looked for finished goods prices to increase at a 1.51 per cent annual rate, also slightly above last month’s 1.27 per cent pace.

Current Price Trends


ORIGINAL: Out at 10:00 AM ET. Analysts expect a reading of 5 on the index after last month’s reading of 4.

More to come…

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