Richmond Fed Manufacturing:
Activity Improved in November
As a resident of the Fifth District, this is a regional manufacturing index I pay close attention to. The Fifth District includes Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. The Federal Reserve Bank of Richmond is the region's connection to the nation's Central Bank.
The complete data series behind today's Richmond Fed manufacturing report (available here), which dates from November 1993. The chart below illustrates the 21st century behavior of the diffusion index that summarizes the individual components.
Today's update shows the manufacturing composite at 13, a substantial improvement over the last two months, which hovered around zero after hitting an interim high of 14 in August. Today's number came in well above the Investing.com forecast for an increase to 3. Because of the highly volatile nature of this index, I like to include a 3-month moving average to facilitate the identification of trends, now at 4.7.
Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.
Here is the latest Richmond Fed manufacturing overview.
Manufacturing in the Fifth District improved in November, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders rose. Employment, average workweek, and wages also picked up this month. Capacity utilization and the backlog of orders flattened, while vendor lead-time rose at a slower pace.
Manufacturers were optimistic about their future business prospects. Firms anticipated shipments and the volume of new orders would grow more quickly during the next six months. Additionally, they expected an increase in capacity utilization. Producers looked for rising backlogs of new orders and expected shorter vendor lead times. Survey participants predicted an increase in the number of employees and faster wage growth during the next six months. Additionally, firms projected slower growth in the average work week.
Raw materials and finished goods prices rose at a slower pace in November compared to last month. For the six months ahead, manufacturers expected slower growth in prices paid, while prices received were projected to increase at a faster pace, compared to their outlook of a month ago.
Here is a somewhat closer look at the index since the turn of the century.
Is today's Richmond composite a clue of what to expect in the next PMI composite? We'll find out when the next Manufacturing ISM Report on Business is released on October 1st.
Because of the high volatility of this series, we should take the data for any individual month with the proverbial grain of salt.