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posted on 28 April 2015

Richmond Fed Manufacturing Survey Shows Contraction Continues in April 2015

Of the five regional Federal Reserve surveys released to date, one shows manufacturing expanding weakly and four are in contraction. The market expected this survey index at -3 to +2 (consensus -2.0) versus the -3.0 actual [note that values above zero represent expansion].

Manufacturing activity remained soft in April, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments, order backlogs, and the volume of new orders declined, although at a slower pace compared to last month. Manufacturing employment grew mildly, while the average workweek increased and wages rose slightly.

Manufacturers looked for better business conditions in the next six months. Survey participants expected faster growth in shipments and in the volume of new orders in the six months ahead. Producers also looked for increased capacity utilization and anticipated rising backlogs. Expectations were for somewhat longer vendor lead times.

Survey participants planned more hiring, along with moderate growth in wages and a pickup in the average workweek during the next six months.

Prices of finished goods rose more rapidly in April compared to last month. Additionally, prices of raw materials grew slightly faster than a month ago. Firms looked for faster growth in prices paid and prices received over the next six months, although their outlook was below March's expectations.

Current Activity

Overall, manufacturing conditions remained soft in April. The composite index for manufacturing moved to a reading of −3 following last month's reading of −8. The index for shipments and the index for new orders gained seven points in April, although both indicators finished at only −6. Manufacturing employment grew mildly this month. The indicator gained one point, ending at a reading of 7.

The indicator for vendor lead time remained negative. That gauge moved up three points to a reading of −6. Capacity utilization remained soft. The index moved up three points ending at −4. The index for backlog of new orders gained four points, finishing at a reading of −8. Finished goods inventories rose at a slower pace than a month ago. The index lost seven points, ending at 18.

Additionally, raw materials inventories increased at a slower rate compared to last month. That gauge moved to 19 from 25.

Read entire source document from Richmond Fed

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

z richmond_man.PNG

Kansas Fed (hyperlink to reports):

z kansas_man.PNG

Dallas Fed (hyperlink to reports):

z dallas_man.PNG

Philly Fed (hyperlink to reports):

z philly fed1.PNG

New York Fed (hyperlink to reports):

z empire1.PNG

Federal Reserve Industrial Production - Actual Data (hyperlink to report):

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 (darkest bar).

Comparing Surveys to Hard Data:

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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