Fifth District manufacturing activity surprising bounced back into
expansion in October, according to the latest survey from the Richmond
Fed, whose composite index rose 17 points to 8. Easily beating the
consensus as well as the range of analysts' forecasts calling for
continuing contraction, the overall gain reflected increases in all
three of the main components, with the index for shipments rising 18
points to 4, new orders gaining 21 points to 7, and employment 10 points
13.
Among current conditions components also moving back into
the plus column were backlog of orders (6 after minus 11), capacity
utilization (7 after minus 11) and local business conditions (4 after
minus 15).
Expectations for the next six months were mostly more
optimistic, particularly for shipments, which rose 9 points to 24, and
volume of new orders, gaining 11 points to 33.
On the inflation
front, growth rates of both prices paid and prices received fell in
October, as growth of prices paid continued to outpace that of prices
received. Survey participants expected the pace of growth of both prices
paid and prices received to slow further in the near future. Wage
growth expectations also moderated, falling 9 points to 15.
Today's
report hints at a possible rebound for the factory sector where
persistent weakness this year has provided some of the arguments for
Fed rate cuts.
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