US: Richmond Fed Manufacturing Index

Tue Aug 25 09:00:00 CDT 2015

Consensus Consensus Range Actual Previous
Level 10 8 to 15 0 13

Early indications on August factory conditions are mixed with Richmond the latest, coming in at a disappointing zero. Orders are flat this month at only 1 vs 17 and 10 in the prior two reports. And backlogs are in deep contraction at minus 15. Shipments are also negative at minus 4 and capacity utilization is at minus 5. Hiring is flat and price data are mute. This report follows last week's big fall in the Empire State report and respectable readings in the Philly Fed and manufacturing PMI reports. All together, they point to a bumpy month for the still struggling factory sector. Next regional report will be Thursday from the Kansas City Fed where recent contraction has been deep.

Market Consensus Before Announcement
The Richmond Fed manufacturing index was a standout in July, rising 7 points to 13 while many other regional reports, especially those for Kansas City and Dallas, were still posting big declines tied to falling exports and falling demand for energy equipment. Forecasters see Richmond's index holding solid at 10 in August.

This survey provides a comprehensive set of indicators of business conditions within the fifth region's manufacturing sector. The survey provides participants' knowledge of recent changes in manufacturing activity as well as insights into expected developments in six months. The data are released the fourth Tuesday of each month. The headline index is the composite for current month activity. It is a weighted average of the shipments (33%), new orders (40%) and employment (27%) indexes. (Federal Reserve Bank of Richmond)

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. By tracking economic data such as the regional Fed surveys, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth so that it won't lead to inflation. These surveys give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on market behavior.