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Tuesday, September 25, 2018

Richmond Fed Manufacturing Index Expands At Robust Pace

Manufacturing activity in the Fifth District expanded at a more robust pace than expected in September, with the Richmond Fed Manufacturing Index rising 5 points to 29. Leading the composite index higher despite consensus forecasts calling for deceleration were shipments, up 10 points 33, and new orders, which rose 9 points from August to 34. Countering the strong showing in other business activities was employment, which deviated from usual strength exhibited in previous months by falling 9 points to 16.

Other current conditions components showing acceleration included backlog of orders, up 5 points 20, capacity utilization, up 2 points to 20, and capital expenditures, which rose 8 points to 29. Local business conditions surged 14 points higher to 27.

Despite the deceleration in the number of employees, employment did show strength in other measures, with wages rising 6 points to 33, the average working week up 3 points to 19 and available skills became less negative by rising 6 points to minus 11.

Price inflation accelerated in September after easing in the previous month, both in prices paid and prices received, with input price growth continuing to outpace outputs.

Signs of overheating in the continuing expansionary acceleration of manufacturing in the Fifth District contrast with cooling seen in other districts recently and should give a boost to Fed hawkishness.

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