Richmond Fed Manufacturing Growth Improves in September 2014

Of the three regional Federal Reserve surveys released to date, all show manufacturing expanding in August 2014. A complete summary follows. The market expected this survey index at 8 to 15 (consensus 14.0) versus the 14 actual [note that values above zero represent expansion].

Fifth District manufacturing activity continued to grow at a moderate pace in September, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders picked up this month. Manufacturing employment also strengthened this month, while average wages rose at a slower pace and the average workweek lengthened.

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

Survey participants anticipated steady growth in the number of employees and the average workweek during the next six months. Additionally, they expected faster growth in wages. Prices of raw materials and finished goods rose at faster pace in September compared to last month. For the six months ahead, manufacturers expected slower growth in prices paid, and anticipated faster growth in prices received.

Current Activity

Overall, manufacturing conditions strengthened in September. The composite index for manufacturing moved to a reading of 14 following last month’s reading of 12. The index for shipments edged up one point, ending at 11, while the index for new orders also gained one point, finishing at a reading of 14. Manufacturing employment strengthened this month. At an index of 17, the September indicator gained six points from last month’s reading of 11.

Backlogs rose at a slower pace this month; the index settled at a reading of 6. Additionally, capacity utilization grew at a slower pace, moving the index down four points ending at 13. Vendor lead time shortened, moving the index to 10 from a reading of 16 last month. Finished goods inventories rose at a faster pace compared to a month ago. The index gained seven points, ending at 23. Raw materials inventories increased at a faster rate compared to last month. That gauge moved to 20 from 17.

Read entire source document from Richmond Fed

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

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Kansas Fed (hyperlink to reports):

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Dallas Fed (hyperlink to reports):

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Philly Fed (hyperlink to reports):

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New York Fed (hyperlink to reports):

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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 (dark green bar).

Comparing Surveys to Hard Data

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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.