The Richmond Federal Reserve Bank announced that manufacturers in its region expanded at a slightly faster pace in April, an improvement from the easing in March. While activity in 2012 has picked up from weaknesses at the end of 2011, the composite index has been somewhat volatile, even with numbers that are still “expansionary.”
It has registered 12, 20, 7, and 14 in the first four months of the year. Still, the higher April index reading is welcome news, especially with so many other regions reporting slightly weaker activity of late.
Looking at the surveys subcomponents, manufacturers have seen increased new orders, shipments, capacity utilization and employment in April. Inventory levels for both finished goods and raw materials were also higher.
Moreover, the outlook for the next six months remains positive. Some of the expectations variables dipped slightly, including the volume of new orders, capacity utilization and capital expenditures. But, the net percentage of respondents anticipating higher levels of each is still sufficient to report a mostly optimistic assessment. From a job creation standpoint, more firms are anticipating adding workers in the coming months than said so in the last survey.
In terms of pricing pressures, manufacturers in the region expect moderate inflation to persist. They are currently reporting price increases of 2.71 percent on average at the annual rate, up from 2.5 percent last month. The anticipation for the next six months would be for prices to grow by 2.55 percent.
Chad Moutray is chief economist, National Association of Manufacturers.