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posted on 27 October 2015

Richmond Fed Manufacturing Survey Also In Contraction in October 2015 - at Expectations.

Of the five regional Federal Reserve surveys released to date,four are in contraction and one is in expansion.

The market expected values (from Bloomberg) from -4 to 0 (consensus -2) with the actual survey value at -1 [note that values above zero represent expansion].

Fifth District manufacturing activity remained soft in October, according to the most recent survey by the Federal Reserve Bank of Richmond. Order backlogs and shipments declined, while new orders leveled off. Manufacturing employment remained soft, growing at the same pace as a month ago. The average workweek shortened and average wages rose moderately. Raw materials prices rose at nearly the same pace as in September, while prices of finished goods dropped in October.

Manufacturers looked for better business conditions during the next six months. Survey participants continued to expect 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 an increase in vendor lead times during the next six months.

Survey participants planned more hiring, along with moderate growth in wages and a pickup in the average workweek during the next six months. Looking ahead, manufacturers anticipated faster growth in prices paid and prices received.

Current Activity

Overall, manufacturing conditions remained soft in October. The composite index for manufacturing flattened to a reading of −1, following last month's reading of −5. Additionally, the index for new orders leveled off this month, gaining 12 points to end at 0. The index for shipments remained negative, losing one point to end at −4. Manufacturing employment continued to increase mildly this month. The indicator remained at a reading of 3 for a second month.

The October indicator for vendor lead time decreased from a reading of 7 to −2. Additionally, capacity utilization remained soft this month, with the gauge moving up five points to a reading of −14. The index for backlogs of new orders rose 17 points, finishing at −7. Finished goods inventories rose at a faster rate than a month ago. The index picked up four points to end at 25. Additionally, raw materials inventories increased at a faster rate this month. That gauge gained four points to end at 26.

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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