Fifth District manufacturing activity was flat on balance this month following an uptick in March, according to the Richmond Fed’s April survey, released on April 22. The overall index flatlined as growth in factory shipments and new orders tapered off and factory employment contracted further. Most other indicators also suggested additional softness. Consistent with generally sluggish activity, delivery times reversed the positive reading posted last month. Our gauges of capacity utilization and orders backlogs moved lower as well. In addition, manufacturers reported that growth in inventories remained on pace with March.
Looking forward, assessments of business prospects for the next six months were generally on par with last month’s readings. Firms looked for slower growth in shipments and new orders, but looked for an uptick in capacity utilization.
On the price front, growth in prices paid remained elevated in April and prices received rose at a quicker pace. Looking ahead, respondents indicated that they expected price growth to advance a bit more slowly during the next six months than they had anticipated last month.
Looking forward, assessments of business prospects for the next six months were generally on par with last month’s readings. Firms looked for slower growth in shipments and new orders, but looked for an uptick in capacity utilization.
On the price front, growth in prices paid remained elevated in April and prices received rose at a quicker pace. Looking ahead, respondents indicated that they expected price growth to advance a bit more slowly during the next six months than they had anticipated last month.
Current activity
In April, the seasonally adjusted manufacturing index — the Richmond Fed's broadest measure of manufacturing activity — decreased to zero from March’s reading of 6. Among the index’s components, shipments lost seven points to 6, new orders moved down five points to 2 and the jobs index lost seven points to finish at minus-12.
Other indicators also suggested weaker activity. Vendor delivery times turned negative, losing eight points to end at -4 and the orders backlogs index shed five points to -16. Moreover, capacity utilization inched down four points to -6, while its gauges for inventories changed little in April. The finished goods inventory index was virtually unchanged at 38, while the raw materials inventory index slipped two points to 21.
In April, the seasonally adjusted manufacturing index — the Richmond Fed's broadest measure of manufacturing activity — decreased to zero from March’s reading of 6. Among the index’s components, shipments lost seven points to 6, new orders moved down five points to 2 and the jobs index lost seven points to finish at minus-12.
Other indicators also suggested weaker activity. Vendor delivery times turned negative, losing eight points to end at -4 and the orders backlogs index shed five points to -16. Moreover, capacity utilization inched down four points to -6, while its gauges for inventories changed little in April. The finished goods inventory index was virtually unchanged at 38, while the raw materials inventory index slipped two points to 21.
Employment
Labor market activity at District plants weakened in April as firms downsized staff, reduced the workweek and scaled back paychecks. The employment index registered a -12 vs. March’s reading of -5, while the average workweek indicator dropped four points to end at -8. Moreover, wage growth eased two points to 10.
Labor market activity at District plants weakened in April as firms downsized staff, reduced the workweek and scaled back paychecks. The employment index registered a -12 vs. March’s reading of -5, while the average workweek indicator dropped four points to end at -8. Moreover, wage growth eased two points to 10.
Expectations
In the April survey, the Fed's contacts remained less confident about their business prospects for the next six months. The index of expected shipments edged one point higher to 15, while the new orders indicator inched down three points to 6. The orders backlogs index eased two points to 4; vendor delivery times turned positive, adding three points to 2, and capacity utilization gained six points to 8. In contrast, readings on planned capital expenditures declined further; the index posted a two-point loss to 0.
District manufacturers’ hiring plans for coming months were little changed from last month. The expected manufacturing employment and average workweek indexes each gave up one point to end at 4 and 1, respectively. Additionally, the expected wage index posted a two-point loss to 18.
In the April survey, the Fed's contacts remained less confident about their business prospects for the next six months. The index of expected shipments edged one point higher to 15, while the new orders indicator inched down three points to 6. The orders backlogs index eased two points to 4; vendor delivery times turned positive, adding three points to 2, and capacity utilization gained six points to 8. In contrast, readings on planned capital expenditures declined further; the index posted a two-point loss to 0.
District manufacturers’ hiring plans for coming months were little changed from last month. The expected manufacturing employment and average workweek indexes each gave up one point to end at 4 and 1, respectively. Additionally, the expected wage index posted a two-point loss to 18.
Prices
District manufacturers reported that raw material prices increased at an average annual rate of 4.63 percent in April — the second-highest reading since the inception of our survey in December 1993 — compared to March’s record-breaking reading of 4.97. Respondents continued to express concerns about rising energy and commodity costs and they indicated that it was impossible to pass along price increases. Finished good prices rose at a 2.55 percent pace — up slightly from March’s reading of 1.98. Looking ahead to the next six months, respondents expected that the prices they pay will advance at a 4.35 percent pace — the third-sharpest increase in the survey’s history — compared to the previous month’s expectation of 5.44 percent. In addition, contacts looked for finished good prices to increase at a 1.98 percent annual rate during the next six months compared to last month’s expectation of 2.85 percent.
District manufacturers reported that raw material prices increased at an average annual rate of 4.63 percent in April — the second-highest reading since the inception of our survey in December 1993 — compared to March’s record-breaking reading of 4.97. Respondents continued to express concerns about rising energy and commodity costs and they indicated that it was impossible to pass along price increases. Finished good prices rose at a 2.55 percent pace — up slightly from March’s reading of 1.98. Looking ahead to the next six months, respondents expected that the prices they pay will advance at a 4.35 percent pace — the third-sharpest increase in the survey’s history — compared to the previous month’s expectation of 5.44 percent. In addition, contacts looked for finished good prices to increase at a 1.98 percent annual rate during the next six months compared to last month’s expectation of 2.85 percent.
