News

Manufacturing activity in the Fifth District deteriorated in August, but at a slower pace than the previous month, with the composite manufacturing index rising from -20 to -7. Meanwhile, the local business conditions index improved, increasing from -11 in July to 0 in August. On the other hand, manufacturers are still pessimistic about the future, and more so than in the prior month, with the outlook for future local business conditions declining from -2 in July to -10 in August. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative but contracted at a slower pace than in July, climbing to -5, -6 and -11, respectively. The vendor lead time index increased from 7 to 11. The share of firms reporting backlogs improved but remained negative, rising from -30 to -12. Meanwhile, the average growth rate of prices paid rose notably, while prices received declined slightly.

Looking ahead, firms expect the growth rate of prices paid to remain elevated and anticipate the growth rate of prices received to rise in the next 12 months. Expectations for future shipments increased from 11 to 13, while new orders stayed the same at 9. Expectations for backlogs worsened slightly, moving from -9 to -10. Meanwhile, firms maintained a cautious approach to equipment and software spending. Expectations for capital expenditures improved to -15 from -19. In sum, businesses in the Fifth District are pessimistic about prospects for future growth and are still avoiding making new investment plans.