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posted on 23 February 2016

Richmond Fed Manufacturing Survey Slipped Into Contraction in February 2016.

Of the three regional Federal Reserve surveys released to date, all are in contraction.

No market expectations from Bloomberg were between -1 to 3 (consensus 2). The actual survey value was -4 [note that values above zero represent expansion].

Fifth District manufacturing activity slowed in February, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders decreased modestly this month. Manufacturing hiring continued to increase at a modest pace, while average wages grew mildly and the average workweek lengthened slightly. Prices of raw materials and finished goods rose at a slower pace this month, compared to January.

Despite the current soft conditions, manufacturers remained upbeat about future business conditions. Expectations were for solid growth in shipments and in new orders in the six months ahead. Additionally, firms looked for increased capacity utilization and anticipated rising backlogs. Producers looked for shorter vendor lead times.

Producers expected faster employment growth and moderate growth in wages during the next six months. Survey participants looked for modest growth in the average workweek. Looking ahead, manufacturers anticipated faster growth in prices paid and prices received.

Current Activity

Overall, manufacturing activity slowed in February. The composite index softened six points to a reading of −4. Additionally, new orders and shipments decreased this month. The indicators finished at −6 and −11, respectively. Manufacturing employment grew at the same pace as a month ago; the index remained at 9.

Backlogs decreased in February, with the index ending 18 points lower at −14. Capacity utilization also declined this month, pulling the index down to −5. Vendor lead time lengthened slightly, with that indicator gaining two points to end at 6. Finished goods inventories rose at a moderate pace in February; the index lost four points ending at a reading of 20. Raw materials inventories also rose at a moderate pace, reaching a reading of 36.

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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