Economy

Richmond Fed Manufacturing Index Plummets in August

August 23, 2016

Manufacturing activity in the Fifth District was weaker in August according to the most recent survey by The Federal Reserve Bank of Richmond.

The composite manufacturing index for August plummeted to -11 after July’s reading of +10. Shipments fell sharply losing 21 points for an index reading of -14, while the new orders index plunged 35 points to -20. Backlogs dropped to -21 from 1.0 in July. The indices took a similar dive in June before bouncing back last month.

Employment was essentially unchanged from July gaining one point for a positive reading of 7.

Capacity utilization and vendor lead times both fell in August. Inventories of finished goods and raw materials both increased during the month. Prices for raw materials rose slightly faster this month while finished good prices rose at a slower pace.

Manufacturers expect business conditions to improve in the next six months with stronger orders and shipments and improved capacity utilization. Raw material price are expected to remain steady but selling prices to rise faster. An uptick in hiring is anticipated.