Richmond Fed: Manufacturing Activity Improves in July

July 26, 2016

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Courtesy of Doug Short’s Advisor Perspectives.

Today the Richmond Fed Manufacturing Composite Index jumped 20 points to 10 from last month’s revised -10. Investing.com had forecast -4. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 0.2, still indicating expansion. The complete data series behind today’s Richmond Fed manufacturing report (available here), which dates from November 1993.

Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

Here is the latest Richmond Fed manufacturing overview.

Fifth District manufacturing activity improved in July, according to the most recent survey by the Federal Reserve Bank of Richmond.* New orders and shipments increased this month, while backlogs flattened. Employment rose modestly, while firms continue to report wage increases. Prices of raw materials and finished goods rose at a slower pace in July, compared to last month.

Manufacturers looked for better business conditions during the next six months. Firms expected moderate growth in shipments and in the volume of new orders in the six months ahead. In addition, survey participants anticipated increased capacity utilization and expected backlogs to rise. Expectations were for little change in vendor lead times during the six months ahead.

Survey participants’ outlook for the months ahead included mild growth in the number of employees. Future wage increases were more prominent in the July expectations index. Firms expected faster growth in prices paid, however, anticipating somewhat slower growth in prices received. Link to Report

Here is a somewhat closer look at the index since the turn of the century.

Is today’s Richmond composite a clue of what to expect in the next PMI composite? We’ll find out when the next ISM Manufacturing survey is released (below).