Richmond Fed Manufacturing Report Shows Contraction

Fifth District manufacturing activity unexpectedly fell into contraction in July, according to the latest survey from the Richmond Fed, whose composite index fell 14 points to minus 12, its lowest reading since January 2013. Coming in sharply below the range of analysts' forecasts, the slowdown was driven by declines in in all three major components of the index, with shipments down 18 points to minus 13, new orders down 16 to minus 18, and the number of employees down 7 points to minus 3 in more than three years.

Weakness was registered in nearly all components, with some posting double digit declines. Backlog of orders fell 29 points to minus 26, the lowest level since April 2009, while capacity utilization fell 20 points to minus 24. Companies reported worsening local business conditions, with the index plunging 25 points to minus 18, the largest monthly drop on record.