Dallas and Richmond Fed Manufacturing Surveys Are Mixed

Two regional surveys on manufacturing released this morning provided mixed results regarding activity in their districts.

First, the Richmond Federal Reserve Bank found that manufacturing activity picked up slightly after stabilizing last month. The index of general business conditions rose from no change in November to +3 in December. The Richmond district observed contracting activity from July to October.

There were improvements across the board in a number of areas, including shipments, new orders, finished goods inventories, the average workweek and wages. But the number of employees contracted slightly.

Looking ahead six months, manufacturers remained very positive, but their expectations eased somewhat from last month. For instance, the index for new orders fell from 37 to 21 for the month, with similar shifts seen in data for shipments, employment and capital spending.

Pricing pressures have also eased. Last month, respondents said that prices paid for raw materials rose 3.42 percent on an annual basis. This month, that increase was just 0.81 percent. Moving into 2012, prices paid for raw materials are expected to go up 2.7 percent.

Meanwhile, the Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas found that manufacturers were contracting less than in November. Measures for production, new orders and shipments were less negative in December than the previous month, signifying some improvement in the market.

In addition, businesses had a better outlook for themselves than for the economy as a whole. The general business activity index dropped from 3.2 to -3.0 for the month, suggesting a slight increase in pessimism. Yet, the company outlook index rose from 4.7 to 6.6, reflecting improved company performance. Perhaps because of this, measures for employment were higher.

The future outlook is also rosier, with manufacturers optimistic on all of their production, employment and capital spending indicators. Most of them suggested strongly positive growth in the months ahead — a good sign.

Overall, these surveys observe some modest improvements among manufacturers in their respective districts, with the Texas indicators still showing some contractions. As we move into 2012, though, the outlook is brighter.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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