Richmond Fed Manufacturing Survey

Richmond Fed Manufacturing Survey

The Richmond Federal Reserve Bank reported that manufacturing activity continued to expand at a solid pace in July, albeit at a marginally slower rate than in June. The composite index for general business assessment edged down from 21 in June to 20 in July. Despite the slight drop, the underlying data remained encouraging. New orders remained robust (unchanged at 22), with still healthy growth in shipments (down from 17 to 16), employment (down from 23 to 22), wages (down from 27 to 22), the average workweek (down from 11 to 10), capital expenditures (down from 26 to 25) and equipment and software spending (up from 17 to 18) even with some softening.
More importantly, manufacturing respondents felt very upbeat about the next six months in their outlook. The forward-looking data continued to be strong, albeit with some deceleration in many of the measures, including new orders (down from 46 to 39), shipments (down from 48 to 44), capacity utilization (up from 36 to 40), employment (down from 33 to 26) and capital expenditures (down from 31 to 30), among others. The index for skills needed remained negative (down from -4 to -10), suggesting an expectation of continued shortages regarding workforce talent.
Meanwhile, manufacturers in the district continue to note accelerating pricing pressures, mirroring data in other reports. Respondents said prices paid for raw materials increased 3.54 percent at the annual rate in July, the fastest pace since October 2012 and up from 3.14 percent in June. In addition, raw material prices are predicted to grow 2.84 percent at the annual rate six months from now, the highest expected rate since May 2013 and up from 2.00 percent in the prior report.  Read More >>