Economic Data and Growth

Manufacturing activity in the Fifth District rose in April after staying the same in March, with the composite manufacturing index increasing from 0 to 3. At the same time, the local business conditions index advanced from -5 to 10 in April. Despite an improvement in the headline index in April, manufacturers are less optimistic about the future, with the outlook for future local business conditions falling from 16 in March to 3 in April. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained unchanged and negative at -2 in April, while new orders rose from 4 to 8. The indexes for employment and vendor lead times ticked up in April, moving from -2 to 0 and from 13 to 14, respectively. Meanwhile, the share of firms reporting backlogs stayed the same, increasing from -10 to 0. At the same time, the average growth rate of prices paid accelerated in April, while the average growth rate for prices received slowed from March.

Looking ahead, firms expressed an expectation that both price indexes would increase in the next 12 months, and at a faster pace than forecasted in March. Expectations for future shipments and new orders remained positive but weakened from 26 to 21 and from 30 to 26, respectively. Expectations for backlogs ticked down from 3 to 0. Meanwhile, firms’ expectations about equipment and software spending fell from -2 to -5. In sum, businesses in the Fifth District are less optimistic about future business conditions and remain pessimistic about future investment plans.