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Richmond Fed manufacturing index declines further into contraction in December

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Richmond Fed manufacturing index declines further into contraction in December

Manufacturing activity in the Federal Reserve's Fifth District declined further into contraction territory in December as the measures for new orders, shipments, capacity utilization and local business conditions fell month over month.

The Federal Reserve Bank of Richmond's composite manufacturing index declined to a seasonally adjusted reading of negative 5 in December from negative 1 recorded in the previous month. The consensus estimate of economists polled by Econoday was for the index to come in at positive 1 in December.

The new orders index slumped to negative 13 from negative 3, and the index for shipments fell to negative 6 from negative 2. On employment, the index for the number of employees rose to positive 7 from positive 5, while the index for wages advanced to positive 29 from positive 24.

Local business conditions and capacity utilization both weakened month over month in December, with their respective indexes falling to negative 6 and negative 12 from positive 5 and positive 2, respectively.

Survey respondents were optimistic that conditions would improve, with expectations for local business conditions in the next six months advancing to an index reading of positive 27 from positive 16.

"Manufacturers continued to report difficulty finding workers with the necessary skills and expected that struggle to continue in the next six months," the Richmond Fed said.

The Fed's Fifth District covers the District of Columbia, Maryland, Virginia, the Carolinas and most of West Virginia. A negative reading on these indexes means that more businesses in the survey reported decreases than increases.