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Richmond Fed manufacturing index contracts more than expected in September

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Richmond Fed manufacturing index contracts more than expected in September

Manufacturing activity in the Federal Reserve's Fifth District contracted more than expected in September following a rebound in the prior month, as the measures for new orders and shipments slipped into negative territory month over month.

The Federal Reserve Bank of Richmond's composite manufacturing index dropped to a seasonally adjusted reading of negative 9 in September from positive 1 in the previous month.

The consensus estimate of economists polled by Econoday was for the index to decline to negative 1 in September.

The component index for shipments slumped to negative 14 in September from positive 5 registered in August, and the index for new orders fell to negative 14 from August's positive 2.

On employment, the index for the number of employees rebounded to positive 3 in September from negative 6, while the index for wages rose to positive 24 from positive 22.

Firms noted deteriorating local business conditions, as the corresponding index declined to negative 15 from negative 3. They still expect conditions to get better in the coming months, though the degree of optimism weakened from August.

Employment and wage growth is expected to continue in the next six months, though firms' struggle with hiring staff is also expected to remain elevated, 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 more businesses in the survey reported decreases than increases.