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posted on 27 January 2015

Richmond Fed Manufacturing Growth Rate Marginally Weakened in January 2015

Of the four regional Federal Reserve surveys released to date, all show manufacturing expanding (although one barely expanding). A complete summary follows. The market expected this survey index at 4 to 8 (consensus 5.5) versus the 6 actual [note that values above zero represent expansion].

Fifth District manufacturing activity expanded at a modest pace in January, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments increased at a faster pace this month, while the volume of new orders remained steady.

Manufacturing employment and average wages grew at a slower pace this month. However, the average workweek grew more quickly. Manufacturers were optimistic about future business conditions. Firms expected faster growth in shipments and new orders in the six months ahead. Additionally, survey participants expected order backlogs to increase and anticipated faster growth in capacity utilization. Expectations were for little change in vendor lead times.

Producers expected faster growth in hiring in the months ahead. They also expected solid growth in average wages and a pickup in the average workweek. Prices of raw materials and finished goods rose at a slower pace compared to last month. Survey participants expected faster growth in prices paid and prices received over the next six months.

Current Activity

Overall, manufacturing activity increased at a modest pace. The January composite index for manufacturing moved down one point to a reading of 6. The index for shipments advanced five points to end at a reading of 10. The index for new orders grew at the same pace as a month ago, finishing at a reading of 4. Manufacturing employment grew at a slower pace this month, pulling the index down eight points to finish at 5.

Capacity utilization increased in January. The index gained 14 points from December's reading to finish at an index of 9. Vendor lead times lengthened compared to a month ago, moving the index up three points to a reading of 5. Backlogs dropped this month. The indicator lost four points to settle at -9. Finished goods inventories rose more quickly compared to a month ago. That index added three points to end at 25. Additionally, raw materials inventories growth remained solid this month. That gauge moved to 19 from 20.

Read entire source document from Richmond Fed

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed:

z richmond_man.PNG

Kansas Fed:

z kansas_man.PNG

Dallas Fed:

z dallas_man.PNG

Philly Fed:

z philly fed1.PNG

New York Fed:

z empire1.PNG

Federal Reserve Industrial Production:

Holding this and other survey's Econintersect follows accountable for their predictions, the following graph compares the hard data from Industrial Products manufacturing subindex (dark blue bar) and US Census manufacturing shipments (lighter blue bar) to the Richmond Fed Survey (dark green bar).

Comparing Surveys to Hard Data

/images/z survey1.png

In the above graphic, hard data is the long bars, and surveys are the short bars. The arrows on the left side are the key to growth or contraction.

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