US: Richmond Fed Manufacturing Index

Tue Dec 22 09:00:00 CST 2015

Actual Previous
Level 6 -3

Good news can sometimes be hard to find (at least for the factory sector) but the Richmond Fed is reporting a burst of strength, at an index of 6 in December for the first plus reading since way back in July. Leading the details are new orders, at a very solid 8 for the first positive reading since August. Backlog orders are unchanged at zero which is the best reading since July. Manufacturers in the sample are hiring this month, at a very strong index of 12. Price pressures are mute but are at least in the plus column. This report is the exception so far among regional Fed reports which, led by last week's Philly Fed, are definitely not pointing to a rebound for December manufacturing. Watch next week for data from the hard hit Dallas Fed.

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.