Richmond Fed Says Manufacturing Improved in August

Written by Sandy Williams

Manufacturing activity continued to improve in the Fifth District in August, according to the survey of manufacturing activity conducted by the Federal Reserve Bank of Richmond.

The composite index rose to 12 for its highest reading since March 2011. Shipments gained 7 points advancing to 10 while new orders gained 8 points registering 13. Employment gains were slower in July dipping two points to a reading of 11.

The backlog index increased to a reading of 15 as vendor lead times lengthened. Finished goods inventories rose four points to a reading of 16. Raw material inventories increased at a slower rate with an index reading of 17 compared to 21 in June.

Raw material prices advanced more slowly to an annualized rate of 1.39 percent from 1.99 percent the previous month. Finished goods prices rose at an annualized rate of 0.76 percent compared to July’s rate of 0.99 percent.

In the outlook for the next six months, manufacturers said they anticipate more robust conditions. The outlook index jumped 14 points to 29. Capital spending is expected to grow at a faster rate and capacity utilization to improve. Both input and finished goods prices are expected to increase over the next six months.

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