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posted on 28 February 2017

Richmond Fed Manufacturing Survey Again Improves In February 2017.

Of the five regional Federal Reserve surveys released to date, all are in expansion.

Analyst Opinion of Richmond Manufacturing

For the fourth month, the regional Fed surveys seem to be saying uniformly that growth is expanding. The Richmond Fed subcategories were strong - especially new orders.

There were no market expectations from Bloomberg. The actual survey value was +17[note that values above zero represent expansion].

Fifth District manufacturing activity expanded in February, as shipments increased and the volume of new orders rose broadly, according to the latest survey by the Federal Reserve Bank of Richmond. Employment gains were more common and longer workweeks prevailed. Wage increases were more widespread. Prices paid for inputs rose more rapidly than in January, and prices received also accelerated.

Looking to the six months ahead, manufacturing executives anticipated robust business conditions, with strong growth in shipments and new orders, along with higher capacity utilization. Expectations moderated for vendor lead times. Manufacturers' outlook on employment was similar to a month ago, with expectations for increased hiring and additional wage growth.

Survey respondents expected prices of inputs to moderate compared to the current month and prices received to rise slightly faster in the six months ahead.

Current Activity

Manufacturing activity strengthened in February, pushing the composite index to 17 from the previous reading of 12. The shipments gauge moved three points higher, to settle at a reading of 16, and the index for the volume of new orders jumped to 24 from 15. The backlog of orders also picked up, with that index moving to 8 from 4. Vendor lead times lengthened, with the indicator rising to 9 from January's reading of 5. Finally, the index for capacity utilization nearly doubled from the previous reading, finishing the survey period at 15.

Inventories of raw materials and finished goods rose widely. The index for raw materials inventories added five points in February to reach a reading of 20, while the index for finished goods inventories picked up six points to finish at a reading of 14.

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).

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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