Data from the Federal Reserve Bank of Richmond revealed a continued contraction in manufacturing activity in the U.S. central region in August, albeit at a slower rate. Despite the improvement, firms remain cautiously optimistic about the future.
Index Shows Improvement
The Fifth District Survey of Manufacturing Activity’s index increased by two points in August, reaching minus seven compared to July’s reading of minus nine. This result exceeded expectations, as economists had predicted a slight decline to minus 10.
Surveying Firms in the Fifth District
The index is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, encompassing the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.
Component Indices
Among the three component indices that make up the indicator, both shipments and new orders experienced a rise compared to the previous month. Demand showed a slight increase, although it remained relatively sluggish. However, the employment index fell back into contraction after a brief period of growth, indicating a downturn in manufacturing jobs.
Changes in Prices
According to the Richmond Fed, the average growth rates of prices paid and prices received slipped in August. Of note, prices paid fell below firms’ expectations for the year.
Growing Optimism
Despite the challenging conditions, companies in the region demonstrated a more optimistic outlook regarding local business conditions. The index measuring optimism experienced notable growth.
