The Federal Reserve Bank of Richmond released its latest survey of manufacturing activity in the Fifth District, which covers Maryland, D.C., North Carolina, South Carolina, Virginia and most of West Virginia. The survey, conducted between June 14 and June 22, 2023, showed that manufacturing activity remained relatively flat in June, as the composite index rose from -15 in May to -7 in June. The index is a weighted average of three component indexes: shipments, new orders and employment.
The shipments and new orders indexes improved but stayed below zero, indicating a decline in both demand and production. The employment index fell slightly from 5 in May to 2 in June, suggesting little change in hiring. Firms reported reductions in backlogs of orders and vendor lead time, as well as increases in inventories and spending.
Firms grew less pessimistic about local business conditions, as the index rose notably to -8 in June. Furthermore, the index for future local business conditions increased to 3 from -16, indicating a shift from negative to positive expectations.
The average growth rate of prices paid decreased somewhat, while the average growth rate of prices received decreased notably in June. Firms expect both growth rates to moderate over the next 12 months.
The survey results suggest that manufacturing activity in the Fifth District remained subdued in June amid supply chain disruptions, labor shortages and inflationary pressures. However, firms also expressed some optimism about the outlook for the next six months, as vaccinations and reopening efforts continue. The Richmond Fed will continue to monitor the situation and provide timely insights on the regional economy.
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