Tag: Richmond Fed

Monday Economic Report – July 28, 2014

Here is the summary for this week’s Monday Economic Report:

The International Monetary Fund (IMF) released its latest World Economic Outlook last week. The report reflected slower growth rates in the United States and elsewhere for 2014 mostly because of disappointing figures during the first half of the year. The IMF now predicts that U.S. real GDP will grow 1.7 percent in 2014, down from the 2.8 percent forecast in April. Much of this downgrade stemmed from the dismal 2.9 percent decline in real GDP in the first quarter, with output contracting for the first time in three years. At the same time, the manufacturing sector provided a positive contribution to growth in the first quarter, according to new data, despite bleakness in other areas. Fortunately, manufacturers are more upbeat about activity during the second half of this year and for next year. The IMF’s outlook for 2015 is for real GDP growth of 3.0 percent in the United States, which is in line with other predictions.

News regarding manufacturing activity was mostly positive last week, with surveys from the Kansas City and Richmond Federal Reserve Banks both reflecting a pickup in shipments and employment in July. New orders continued to grow at a moderate pace in each region, and respondents were mostly upbeat about sales and production over the next six months. Nonetheless, raw material costs have accelerated a bit in the Richmond district, and new export orders have contracted in eight of the past 12 months in the Kansas City district. Meanwhile, new durable goods orders rebounded in June, with year-to-date growth at a reasonably healthy rate of 4.4 percent. This indicates that the sector has recovered for the most part from winter-related softness, even if some components, such as motor vehicle sales, were lower for the month. Similarly, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) reflected relatively strong growth in sales and output for the sector despite some easing in the headline number in July.

Overseas, the data indicate that the Chinese economy has continued to stabilize from weakness in the first five months of the year. The HSBC Flash China Manufacturing PMI expanded for the second straight month in July, with the pace of activity up for new orders, exports and output. The sales pace was the fastest since January 2011, suggesting that recent measures taken by the Chinese government to stimulate growth have had a positive impact. Likewise, Japanese manufacturers also reported expanding levels of sentiment for two consecutive months, but activity decelerated overall and output stagnated. Export sales from Japan, on the other hand, grew. In other news, the European manufacturing sector made marginal progress in July, particularly for production and exports, and the Eurozone has now expanded for 13 straight months. Yet, growth varied from country to country. For instance, German manufacturing activity picked up in July, while the French economy continued to contract.

The other highlights last week centered on housing and pricing. The housing market remains weaker than we would like, as illustrated by the sharp drop in new home sales in June. Still, the June figure was consistent with the annual paces in March and April, with May’s sales numbers appearing to be an outlier. With the slower pace of sales, inventories of homes have increased. In contrast, existing home sales improved for the third straight month, with some progress in the second quarter relative to the softer first quarter. Even in the existing home sales release, however, there were some discouraging findings, including the fact that sales remain below where they were last year and that first-time homebuyers are still having difficulties making purchases. Meanwhile, on the inflation front, the consumer price index increased in June, led by higher gasoline costs. Yet, pricing pressures remain mostly in check, with core inflation up 1.9 percent over the past 12 months.

This week, the focus will be on second-quarter GDP and jobs. The expectation is that output will rebound from the drop in the first quarter, with consensus forecasts ranging from 2.5 percent to 3.5 percent growth. My view is that real GDP in the second quarter should exceed 3.0 percent. Regarding hiring, manufacturers have added, on average, more than 12,500 each month since August, and I would anticipate seeing a comparable figure for July. Nonfarm payrolls should increase by at least the roughly 230,000 average so far in 2014. Other items to look for this week include manufacturing survey results from the Dallas Federal Reserve Bank and the latest numbers for construction spending, consumer sentiment, employment costs and personal income and spending.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Richmond Fed: Manufacturing Activity Expanding at a Modest Pace

The Richmond Federal Reserve Bank said that manufacturing activity grew at a modest pace, expanding for the fourth straight month. The composite index of general business conditions edged slightly higher, up from 4 in June to 7 in July. Note that historical data in the Richmond Fed survey were revised in this edition to reflect new seasonal adjustments.

Despite the improved top-line figure, the underlying data were largely mixed. The biggest positive was hiring, with the employment index up from 4 to 13. This was the fastest pace of hiring growth since December, which was encouraging. Wage (up from 12 to 16) and shipments (up from 2 to 3) were also higher. Yet, new orders (5) expanded at the same pace, and both capacity utilization (down from 7 to 4) and the average workweek (down from 5 to 3) decelerated somewhat for the month.

Still, manufacturers in the Richmond Fed’s district were mostly upbeat about the next six months, with forward-looking measures increasing in July for many indicators. For instance, new orders (up from 27 to 34), shipments (up from 24 to 36), capacity utilization (up from 18 to 29), employment (up from 12 to 19) and capital expenditures (up from 18 to 19) were all higher, with each suggesting relatively healthy paces of growth.

Inflationary pressures have picked up a bit for the month, but remain mostly in-check. Manufacturers in the region said that prices paid for raw materials grew 1.99 percent at the annual rate in July, up from 1.47 percent in June. Looking ahead six months, respondents expect input costs to increase an annualized 1.89 percent, up only marginally from 1.84 percent the month before.

Chad Moutray is the chief economist, National Association of Manufacturers. 

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Monday Economic Report – June 2, 2014

Here is the summary for this week’s Monday Economic Report:

The U.S. economy contracted for the first time in three years in the first quarter of 2014. Real GDP fell 1.0 percent in the quarter, a fairly substantial revision from the earlier estimate of a gain of 0.1 percent. Much of the storyline behind these figures was the same, with consumer spending on services being the only real bright spot. Purchases of durable and nondurable goods were positive, but weather-related challenges dampened both. Weaknesses in business spending for equipment and structures, residential housing investments and reduced goods exports were all major drags on growth.

The bulk of the downward revision stemmed from lower inventory replenishment. Ironically, that could lead to more inventory spending in the second quarter with stocks running lower. In addition, other figures also point to a rebound in activity during the spring months, with my forecast for second-quarter real GDP at 3.8 percent. Still, U.S. and global growth have started off 2014 much slower than anticipated, particularly when averaging together the first and second quarters. For the year, we now expect growth of 2.3 percent, which would indicate a slight downgrade from the more optimistic outlook predicted coming out of the strong momentum during the second half of last year.

The spring rebound in the manufacturing sector can be seen in other data released last week as well, albeit with some mixed news overall. For instance, new durable goods orders rose 0.8 percent in April, building on strong growth in February and March. Nonetheless, excluding transportation, new durable goods orders were up less robustly, suggesting some broader weaknesses beyond the headline monthly figure. Moreover, new durable goods shipments declined 0.2 percent in April, even as the longer-term trend remains positive.

At the same time, regional Federal Reserve Bank surveys show a similar recovery for manufacturers, but also some easing in the latest data. Manufacturing activity in the Dallas Federal Reserve district has now expanded for 12 straight months, but the pace of growth for new orders, production, capacity and employment eased in May. The Richmond Federal Reserve’s report also observed a deceleration in sales growth; however, it also noted a pickup in shipments and hiring. Perceptions about the current business outlook were unchanged, even as conditions had improved from winter weather earlier in the year. Looking ahead six months, respondents in both Dallas and Richmond remain mostly upbeat, even if this enthusiasm was a bit weaker in May.

The two surveys also indicated a rise in pricing pressure expectations, consistent with other reports showing some higher raw material costs. Indeed, prices for personal consumption expenditures have risen 1.6 percent year-over-year, up from 0.9 percent in February and 1.1 percent in March. April’s increase stemmed largely from higher energy prices, with food costs also up modestly (but at a slower pace than the month before).

Speaking of consumer spending, Americans decreased their purchases by 0.1 percent in April following two months of healthy increases. Year-to-date, personal spending has grown 1.6 percent, with purchases up 4.3 percent over the past 12 months. Meanwhile, the two consumer confidence measures—one from the Conference Board and the other from the University of Michigan and Thomson Reuters—moved in opposite directions in May, even as they continue to reflect rising sentiment over the past few months, particularly since the government shutdown.

This week, the focus will be on jobs and trade. We will get new employment numbers for May on Friday, which we hope will build on April’s strong figures. Manufacturers have averaged just more than 13,000 workers per month since August, and the expectation is for job growth in the sector around 10,000 or so in May. The consensus forecast is for 215,000 additional nonfarm payroll workers for the month, suggesting decent hiring. On the international front, we will learn if manufactured goods exports can improve from the rather disappointing rates so far in 2014, up just 1.1 percent in the first quarter of this year relative to the same three months in 2013. Other highlights include new data on construction, factory orders, productivity and Purchasing Managers’ Index figures from the Institute for Supply Management.

Chad Moutray is the chief economist, National Association of Manufacturers. 

percent change in real GDP - jun2014

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Richmond Fed: Pace of Growth was Unchanged in May for Manufacturers

The Richmond Federal Reserve Bank reported an unchanged pace of growth in May. The composite index of general business conditions remained the same in May (7) as it was in April. Nonetheless, the data also show that the sector continues to expand modestly following weather-related declines in both February and March.

The pace of new orders eased for the month (down from 10 to 3), but sales expanded for the second straight month. Meanwhile, shipments (up from 6 to 10) and employment (up from 4 to 10) accelerated in May. The latter was at its fastest pace since December, and it was a nice improvement from the stagnant hiring rates of February and March. Still, the average workweek edged up only slightly (up from 2 to 3), with wages rising sharply (up from 6 to 22).

While manufacturers in the Richmond Fed district remain mostly positive about the next six months, that optimism has eased somewhat over the past two months. For instance, the forward-looking shipments index has fallen from 31 in March to 22 in April to 17 in May. Other measures followed suit, including slightly decelerated but still strong anticipated growth rates for sales, capacity utilization, and employment. In contrast, capital spending plans rose slightly, up from 16 in April to 19 in May.

Pricing pressures remained in-check for the most part, but were higher in May. Raw material prices increased 1.36 percent at the annual rate in May, up from 0.78 percent in April. Looking ahead six months, respondents anticipate input prices rising an annualized 1.69 percent, up from 1.32 percent the month before.

Chad Moutray is the chief economist, National Association of Manufacturers. 

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Monday Economic Report – April 28, 2014

Here is the summary for this week’s Monday Economic Report:

Manufacturers contributed $2.14 trillion in value-added output in the fourth quarter of 2013, according to new real GDP data by industry from the Bureau of Economic Analysis. For the first time, the government is releasing this information on a quarterly basis, allowing us to get a better sense of which sectors have had the largest impacts to real GDP in any given quarter. After bottoming out at $1.69 trillion in the second quarter of 2009, manufacturers’ value-added output has bounced back. Overall, the manufacturing sector makes up 12.5 percent of real GDP and has made outsized contributions to output since the end of the recession. For instance, in 2013, manufacturers added 0.40 percentage points to the 1.9 percent growth rate in real GDP, or just more than 21 percent.

This week, we will get our first glimpse of real GDP growth for the first quarter of 2014. Winter storms and weak export sales are expected to take a toll, with consensus expectations around 1.5 percent. With weather-related softness abating as temperatures have started to warm up, we have seen a rebound in activity in many key manufacturing indicators in March, potentially boosting economic growth in the first quarter. I estimate real GDP growth of around 1.8 percent.

Several figures released last week support the notion that manufacturing has begun to recover from softness earlier in the year. For instance, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) reported that production in April was at its highest level since March 2011, with relatively strong growth in new orders. This was true despite some slight easing in the overall PMI figure. Likewise, manufacturing surveys from the Kansas City and Richmond Federal Reserve Banks also found rebounds in activity, and respondents remain mostly optimistic about the next six months. In the Kansas City Federal Reserve report, nearly half of respondents anticipate increased orders, shipments and production in the coming months, and more than one-third plan to bring on new workers and to invest in more capital spending. New durable goods orders for March were also quite positive across the board, rising 2.6 percent for the month and a healthy 9.1 percent year-over-year.

Such news has helped to lift spirits. The Conference Board’s Leading Economic Index (LEI) increased 0.8 percent in March, extending February’s 0.5 percent gain. This was the fastest pace since November, with better production data boosting the increase. In general, the index’s findings were supportive of a growing economy over the coming months. Americans, by and large, have also become more confident. The University of Michigan and Thomson Reuters reported that consumer sentiment rose to its highest point since July 2013, with its headline index rising from 80.0 in March to 84.1 in April. As such, it indicates that Americans’ attitudes have recovered slowly after falling during the government shutdown.

Still, it has not been all good news on the economic front. One area of concern was growth in manufacturing activity in China, which has now contracted for four straight months. Yet, the pace of the decline slowed, with the HSBC Flash China Manufacturing PMI up from 48.0 in March to 48.3 in April. The data largely mirrored the recent deceleration in other economic indicators, including China’s real GDP falling from an annualized 7.7 percent in the fourth quarter of 2013 to 7.4 percent in the first quarter of 2014. Despite the weaknesses, one could put a positive spin on the slightly better—but still contracting—levels of new orders and output. On the other hand, exports have now contracted in four of the past six months, negatively impacting overall manufacturing sentiment.

The other worry was sluggish housing growth. New single-family home sales plummeted, down 14.5 percent in March and off 13.3 percent year-over-year. Higher interest rates are likely a factor. The Mortgage Bankers Association reported significant declines in mortgage applications over the past year, largely for refinancings. At the same time, the number of new mortgages has also stalled. With new home sales down, the supply of new homes for sale has soared from 4.8 months in January to 6.0 months in March. Meanwhile, existing home sales have been soft all year.

In addition to real GDP, other economic highlights this week include new manufacturing surveys from the Institute for Supply Management and the Dallas Federal Reserve Bank and the latest data on construction spending, factory orders and personal income and spending. The Federal Reserve is expected to continue tapering, reducing its monthly purchases of long-term and mortgage-backed securities from $55 billion to $45 billion. On Friday, we will get new jobs numbers for April, with modest gains in manufacturing employment expected and nonfarm payrolls expanding around 200,000.

Chad Moutray is the chief economist, National Association of Manufacturers.

contributions to real GDP - apr2014

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Manufacturers Cite a Rebound in Activity in Richmond Fed District

The Richmond Federal Reserve Bank said that manufacturing activity in its District rebounded in April after contracting in both February and March. The composite index increased from -7 in March to 7 in April as manufacturers have begun to recover from weather-related weaknesses. The pace of new orders (up from -9 to 10) and shipments (up from -9 to 6) both picked up for the month, helping to lead the overall index higher. Capacity utilization returned to growth, but just barely (up from -14 to 1), suggesting some stabilization.

With that said, the index for the average workweek was unchanged (2), and employment growth remained weak, but fortunately positive (up from zero to 4).

Looking forward six months, manufacturers in the region remained mostly upbeat about the future, but that sentiment eased somewhat in April. For instance, the index for expected new orders dropped from 30 to 21. Still, this suggests relatively strong growth in sales over the coming months, with similar optimism for shipments, utilization, hiring, and capital spending. In all, it indicates that manufacturing leaders in the Richmond Fed District are hopeful in their overall outlook despite the slippage in the forward-looking measures in this survey.

Meanwhile, pricing pressures are anticipated to be quite minimal. The prices paid for raw materials edged down from 0.85 percent at the annual rate in March to 0.78 percent in April. Likewise, final goods prices rose just 0.30 percent, down from the 0.32 growth rate the month before. Pricing pressures six months from now also eased, down from 1.81 percent to 1.32 percent.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – March 31, 2014

Here is the summary for this week’s Monday Economic Report:

The U.S. economy grew 2.6 percent in the fourth quarter, according to the most recent revision, and for 2013 as a whole, real GDP growth was a rather lackluster 1.9 percent. Consumer spending, business investment and net exports were bright spots in the fourth quarter, with reduced government spending subtracting nearly one percentage point from growth.

Meanwhile, business economists predict real GDP growth of 2.8 percent on average for 2014, with 1.9 percent growth in the current quarter. (My own forecast is marginally higher for both, up 3.0 percent for the year and 2.1 percent for the first quarter of 2014.) Weather-related slowdowns account for the deceleration in activity, particularly for manufacturers, in the current quarter. However, modest growth is expected to resume once temperatures warm up, and we have already begun to see that. The National Association for Business Economics (NABE) Outlook Survey also suggested that the industry should grow 3.2 percent in 2014 and 3.4 percent in 2015, which would indicate a pickup from the current pace.

The latest manufacturing surveys show a rebound in sentiment after softness from December to February. The Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) slowed a bit, down from 57.1 in February to 55.5 in March. Despite the lower figure, new orders and production growth continued to grow relatively strongly, with overall manufacturing activity improved from January’s winter storms. A similar recovery was seen in regional data from the Kansas City Federal Reserve Bank, mirroring the findings from New York and Philadelphia the week before. Still, not everyone has seen improvements yet. The Richmond Federal Reserve reported lackluster growth in sales and output, with weather continuing to “wreak havoc” for many manufacturers. In addition, while new durable goods orders were up a strong 2.2 percent in February, sales growth increased at the less-than-robust rate of just 0.2 percent when transportation orders were excluded.

On the consumer front, the data were mostly positive, but with some caveats. Personal income and spending both increased 0.3 percent in February, with each rising 3.0 percent over the past 12 months. This was a decent pace, but increased purchases of nondurable goods and services mainly fueled spending growth in February. Durable goods spending declined for the third month in a row. In terms of consumer confidence, the two reports out last week were mixed. The Conference Board’s measure of consumer sentiment reached a six-year high; yet, labor market worries dampened enthusiasm for the current environment. Likewise, the University of Michigan and Thomson Reuters reported that consumer sentiment edged lower in March, with employment and income growth also weighing on respondents’ minds. In both surveys, however, Americans are more confident today than in the fall during the government shutdown.

Looking overseas, Markit released preliminary manufacturing PMI data for China and the Eurozone. Chinese manufacturing activity has now contracted for three consecutive months, with March’s pace being the slowest since July. The data mirror other recent indicators, including industrial production, fixed asset investment and retail sales, which have slowed. As such, they all suggest that real GDP might fall below the 7.7 percent rate in the fourth quarter. (First-quarter real GDP for China will be released on April 15.) Meanwhile, European manufacturers have seen expanding activity levels for nine straight months, even as Eurozone PMI values eased slightly in March. New orders and production remain strong in Germany, and, of note, French manufacturers were positive in their sentiment for the first time since June 2011.

This week, the focus will be on the March jobs numbers, which will come out on Friday. The consensus expectation is for nonfarm payroll growth of around 190,000, with manufacturers hiring somewhere near the 12,000 average experienced in the sector since August. In addition, the Institute for Supply Management (ISM) is expected to show a slight rebound in manufacturing PMI activity in its March data, up from 53.2 in February. Other highlights this week include the latest data on construction spending, factory orders and international trade.

Chad Moutray is the chief economist, National Association of Manufacturers.

gdp forecast - mar2014

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Richmond Fed: Manufacturing Activity Contracted Once Again in March

The Richmond Federal Reserve Bank said that manufacturing activity in its District has contracted for two consecutive months. The composite index declined slightly from -6 in February to -7 in March, both of which represent a dramatic shift from the expansion noted in January (12). As such, respondents to the Richmond Fed survey did not observe the rebound from weather-related softness that was noted in similar surveys from the New York and Philadelphia Federal Reserve Banks.

Instead, growth continued to be lackluster, with new orders (unchanged at -9), shipments (down from -6 to -9), and capacity utilization (down from -7 to -14) all declining for the second straight month. Employment levels were flat. According to the Richmond Fed’s report, “A participant commented that weather has `wreaked havoc’ on demand for the past two months, but he anticipated that his company will be very busy once the weather improves.”

Indeed, manufacturers in the region remained mostly upbeat about the future despite the current weaknesses. The index for expected new orders six months from now improved from 15 in February to 30 in March, returning to where it was in January. Similar rises were seen in the forward-looking measures for shipments (up from 17 to 31), capacity utilization (up from 12 to 29), employment (up from 12 to 22), and capital expenditures (up from 9 to 18). The employment figure was notable because it suggested that the pace of hiring was now at its fastest pace since December 2010.

The prices paid for raw materials edged slightly lower for the month, down from 1.19 percent at the annual rate in February to 0.85 percent in March. Pricing pressures six months from now also eased, down from 2.25 percent to 1.81 percent.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – March 3, 2014

Here is the summary of this week’s Monday Economic Report:

The U.S. economy grew 2.4 percent in the fourth quarter, down from the earlier estimate of 3.2 percent. Given some of the recent weaker manufacturing, retail and housing data, the downward revision was largely expected. Still, there are some positives in the report, with strength in consumer spending, business investment and net exports. Fixed investment was higher in this revision, which was welcome news. Federal government spending accounted for the biggest drag on growth during the fourth quarter, subtracting one percentage point from the total figure.

The bottom line is that real GDP increased 3.3 percent in the second half of 2013, providing some momentum for growth moving into this year. While weather and other factors have dampened the economy recently (and will also reduce real GDP in the current quarter), we still expect 3.0 percent growth for 2014. Manufacturers continue to be mostly upbeat about demand and production over the coming months.

Despite such optimism in the outlook for the year, the current environment for manufacturers clearly has its challenges. Weather has negatively impacted production and shipments in a number of regions around the country, and surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks all observed some easing in activity in February. This followed similar reports from the New York and Philadelphia Federal Reserve Banks the week before. Meanwhile, the Census Bureau has reported lower new durable goods orders for two straight months, with poor weather conditions likely a factor, particularly for auto sales. At the same time, new durable goods orders excluding transportation were higher, suggesting that the broader manufacturing market was slightly better than the headline figure indicated.

Some of the other data remain mixed. New home sales were up sharply in January to their highest level since July 2008, but year-over-year growth was more modest, and inventories of new homes have fallen over the past few months. Nonetheless, the positive report on new home sales stands in contrast to much weaker residential construction figures of late, including housing starts and existing home sales, which have seen negative impacts from the weather. Similarly, the two major reports about consumer confidence moved in opposite directions, with the Conference Board’s measure lower in February and the University of Michigan’s figure edging slightly higher. Doubts about income and labor growth have possibly fed some anxieties in sentiment in both surveys, but the two reports differ in their findings about the economic outlook.

This week, the focus will be on manufacturing activity, employment growth and international trade. We will get February Purchasing Managers’ Index (PMI) data from the Institute for Supply Management (ISM) later this morning. After falling from 56.5 in December to 51.3 in January, the ISM PMI is expected to increase modestly, still indicating weaknesses in new orders and production for the month. On the trade front, we will be looking for better manufactured goods exports in 2014, improving on the modest 2.4 percent growth rate seen in 2013. Still, manufactured goods exports hit an all-time high last year, providing a positive for economic growth.

The biggest news of the week will come on Friday with the release of new jobs numbers. Nonfarm payroll growth has been soft over the past two months, with just 75,000 and 113,000 net new workers added in December and January, respectively. The consensus expectation is for roughly 165,000 nonfarm workers added in February. In contrast, manufacturing job gains have been fairly decent over the past six months, averaging 15,500 since August, and we should get modest gains again in February. One of the bigger conversation pieces will be whether the unemployment rate falls to 6.5 percent in February, which is the rate specified in the Federal Reserve Board’s forward guidance. (Either way, look for the Federal Open Market Committee to change its guidance at its next meeting.) Other highlights this week include the latest data on construction spending, factory orders, personal income and spending and productivity.

Chad Moutray is the chief economist, National Association of Manufacturers.

personal consumption - mar2014

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Richmond Fed: Weather Reduced Manufacturing Shipments, Sales, Overall Activity in February

The Richmond Federal Reserve Bank said that weather negatively impacted overall manufacturing activity in February in its district. As such, it mirrored contracting levels seen in the Philadelphia Fed survey and easing noted in recent Dallas and New York Fed reports. The Richmond Fed’s composite index fell sharply from 14 in January to -6 in February. This was the lowest level since July, and it averaged 9 over the previous six months (August to January) during a period when the sector was experiencing overall decent growth rates.

The effects of weather can be seen in a number of the February indices, including new orders (down from 14 to -9), shipments (down from 14 to -6), capacity utilization (down from 11 to -7), and the average workweek (down from 8 to -5). Indeed, the Richmond Fed’s release notes that “manufacturing facilities experienced downtime in February, with some reductions in shipments” due to the recent dismal weather conditions. Hiring also slowed to a halt, with its index down from 6 to zero for the month.

Despite these soft figures, manufacturers continued to be mostly upbeat in February, albeit with a deceleration in sentiment from January. The forward-looking index for new orders declined from 30 to 15. This indicates that sales growth is still anticipated to grow over the next six months for most manufacturers in the region, but at a slower pace than predicted the month before. Similar figures were seen for shipments, capacity, the workweek and capital spending. On a positive note, hiring is still expected to grow modestly, with its pace unchanged (12) in February.

Meanwhile, pricing pressures eased for the month but were expected to pick up in the months ahead. Prices paid for raw materials increased 1.19 percent at the annual rate in February, down from 1.53 percent in December and 1.32 percent in January. Yet, over the next six months, raw material costs are anticipated to grow an annualized 2.25 percent, up from 1.64 percent predicted last month.

Chad Moutray is the chief economist, National Association of Manufacturers.

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