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Thursday, March 28, 2024

Richmond Fed: Manufacturing Declines in August

Courtesy of Doug Short’s Advisor Perspectives.

Today the Richmond Fed Manufacturing Composite Index dropped 21 points to -11 from last month’s 10. Investing.com had forecast 6. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at -3.5, indicates contraction. 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.

Richmond Fed Manufacturing

Here is the latest Richmond Fed manufacturing overview.

Fifth District manufacturing activity declined in August, according to the most recent survey by the Federal Reserve Bank of Richmond. New orders and shipments decreased this month, while backlogs fell. Hiring increases in the sector expanded modestly across firms, and wage increases were more widespread. Raw materials prices rose at a somewhat faster pace in August, while prices of finished goods rose at a slightly slower pace.

Looking ahead six months, producers anticipated more robust business conditions. Manufacturers expected strong growth in shipments and in the volume of new orders. Survey participants looked for backlogs to rise, and expected longer vendor lead times. Expectations were for increased capacity utilization during the next six months.

Hiring expectations across firms were strong for the months ahead, and producers anticipated future wage increases. Firms expected little change in prices paid, however anticipated somewhat faster growth in prices received in the next six months. Link to Report

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

since 2000

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).

Because of the high volatility of this series, we should take the data for any individual month with the proverbial grain of salt.

Let’s compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

Here is the same chart including the average of the five.

Here are the remaining four monthly manufacturing indicators that we track:

Texas Manufacturing Outlook Survey (TMOS)

Kansas City Manufacturing Survey

Empire State Manufacturing Survey

Philadelphia Fed Manufacturing Business Outlook Survey

Regional Fed Overview

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