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Richmond Fed manufacturing index rebounds more than expected in August

Manufacturing activity in the Federal Reserve's Fifth District rebounded in August after unexpectedly declining in the prior month, as the measures for new orders and shipments rebounded month over month while the component for employment declined.

The Federal Reserve Bank of Richmond's composite manufacturing index advanced to a seasonally adjusted reading of positive 1 in August from negative 12 recorded in the previous month.

The consensus estimate of economists polled by Econoday was for the index to advance to negative 4 in August.

The component index for shipments rebounded to positive 5 in August from negative 13 registered in the previous month, and the index for volume of new orders advanced to positive 2 from July's negative 18.

On employment, the component index for number of employees dropped to negative 6 in August from negative 3, while the index for wages rose to 22 from 20.

The measure for local business conditions remained in negative territory, with the corresponding index advancing to negative 3 from negative 18. Firms still expect conditions to get better in the next six months, though the degree of optimism weakened from July. The expectations index registered a reading of positive 12, down from 25 the previous month.

Wage growth continued, and so did firms' struggles with hiring staff with the required skills, the Richmond Fed said. Firms expect the struggles to continue in the coming months, it added.

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 more businesses in the survey reported decreases than increases.