Richmond district factory orders weaken as shipments recover
The Richmond Fed’s October manufacturing composite stayed at minus 2 as improving shipments coincided with weaker orders and hiring. Order backlogs also fell more sharply, and companies reported softer investment spending. The regional survey recorded faster annual selling-price increases alongside higher wages. Respondents’ expectations for shipments and new orders over the next six months remained positive but weakened.
Economics & Markets··Midday
Weaker orders offset recovering shipments
Manufacturers in the Richmond Federal Reserve Bank’s Fifth District reported an unchanged composite index of minus 2 in October. The regional US central-bank survey had fallen from 4 in August to minus 2 in September. October’s shipments measure improved from minus 5 to zero, while new orders slipped from minus 6 to minus 8 and the employment index eased from 7 to 3.[1], [2]
The composite combines shipments with a 33 per cent weight, new orders with 40 per cent and employment with 27 per cent. These diffusion measures subtract the proportion reporting decreases from the proportion reporting increases. They describe how widespread changes are among respondents. The positive employment reading therefore accompanied a less favourable balance of hiring responses than in September.[1], [2]
Backlogs and investment spending weaken
The order-backlog index dropped to minus 21 from minus 10. Capacity utilisation held at minus 7, while raw-material inventories moved from 6 to minus 2 and finished-goods inventories stayed at 4. The measure of capital expenditure declined from minus 7 to minus 12. Equipment and software spending fell from minus 4 to minus 8, and services expenditure from minus 10 to minus 19.[1], [2]
Wages moved in the opposite direction, with that index increasing from 17 to 20. Reported annual input-price growth edged up from 7.08 per cent to 7.12 per cent, while annual selling-price growth accelerated from 4.19 per cent to 5.27 per cent. Unlike the activity measures, these price figures describe percentage changes over the preceding twelve months. The supplier-delivery-time index rose from 8 to 18, while availability of appropriately skilled workers improved from minus 11 to minus 7.[1]
Six-month orders and shipments expectations soften
For the coming six months, shipments expectations fell from 33 to 19 and new-order expectations from 32 to 22. Expected employment remained at 8. The survey draws on approximately 120–130 manufacturers in Maryland, Virginia, North Carolina, South Carolina, Washington DC and most of West Virginia. Series other than price measures are seasonally adjusted. These responses describe the participating regional businesses and their expectations for activity.[1]
