US: Richmond Fed Manufacturing Index

Tue Sep 26 09:00:00 CDT 2017

Consensus Consensus Range Actual Previous
Level 13 6 to 14 19 14

Manufacturing activity in the Fifth district expanded for the eleventh consecutive month in September, with the Richmond Fed Manufacturing Index surging 5 points from the August reading to 19. The unexpected strength exceeded the range of analysts' forecasts and the consensus of a slight decline to 13. Driving the upsurge in activity in September were shipments, which rose 14 points to a reading of 22, the highest level since December 2010.

Strength was broadly supported, however,seen in new orders, up 3 points 20, capacity utilization, up 6 to 16, and vendor lead times, up 8 to 15.

The employment front showed continued vigor after strong gains in the previous month, and though the number of employees fell back 2 points to 17 and wages slipped 1 point 18, the average workweek rose 6 points to 16.

Expectations mostly remained highly optimistic, led by shipments, at 43 and the volume of new orders, at 42. The only blemish on an otherwise beaming with optimism survey was a 12 point drop to 18 in expected capital expenditures.

Inflation pressures increased in both prices paid and received, though remaining moderate. Expectations of price rises on the paid and received side were also up.

Market Consensus Before Announcement
Robust hiring has only been one of the strengths of the Richmond Fed's manufacturing index which like other regional reports has been running at the hottest levels on record. The index in August came in at 14 with forecasters calling for 13 in September.

This survey tracks business conditions in the Richmond Fed's manufacturing sector. The headline index is a composite of the new orders, shipments, and employment indexes.

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.