Manufacturing activity in the US Mid-Atlantic region demonstrated a stronger-than-anticipated recovery in October, although it still remained in a state of contraction, according to data released by the Federal Reserve Bank of Richmond. The composite index improved to minus 14 this month, a notable rise from minus 21 in September, exceeding analysts' expectations who had forecasted a smaller recovery to a minus 17 as indicated in a survey conducted by Bloomberg. Despite this modest improvement, the latest figures revealed that manufacturing activity in the Fifth District continued to be characterized as "slow" by the Federal Reserve branch.
A closer examination of the data shows that the gauge for shipments increased to minus 8 in October from minus 18 in the previous month. Meanwhile, new orders also saw positive movement, rising to minus 17 from minus 23. Notably, the employment metric showed improvement as well, moving from minus 22 to minus 17, indicating a slight uptick in workforce numbers as reported by the regional Fed's data.
The Richmond Fed commented, "The local business conditions index increased modestly, but remained in negative territory." Furthermore, the average growth rate of prices paid decreased this month, while the rate of prices received saw an increase, underlining a subtle shift in the economic landscape.
Looking ahead, the outlook for orders improved significantly; six months out, the index for new orders surged to 35 this October, a sharp rise from 7 in the preceding month. Additionally, the metric that tracks anticipated future shipments climbed to 22 from 15, reflecting a more optimistic sentiment. The forward-looking indicator for local business conditions made a notable swing to 21 from minus 6, suggesting that businesses are beginning to expect improvements in the economic environment.
Similarly, the future employment index reached 4, a leap from the previous reading of minus 12. The Richmond Fed shared insights that "Firms expected little change in price growth over the next 12 months," indicating a stable outlook in that regard. Earlier this month, data from the New York Fed highlighted a decline in manufacturing activity beyond projections in New York during October, pushing it back into contraction territory.
In contrast, a separate analysis from the Philadelphia Fed pointed out that manufacturing activity within the Mid-Atlantic region strengthened at an unexpectedly robust pace this month, adding complexity to the regional economic picture..