News

Manufacturing activity in the Fifth District improved slightly in February. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. The composite manufacturing index rose from -4 in January to 6 in February. Although activity improved, manufacturers are less optimistic looking ahead, with the outlook for future local business conditions falling from 32 in January to 2 in February.

Among its components, shipments increased from -9 to 12, which led the overall gain in the composite index. New orders rose slightly from -4 to 0. Employment improved from 3 to 9, indicating hiring increased in February. The vendor lead time index dropped from 10 to 2 in February, while the share of firms reporting backlogs remained roughly the same at -6. Companies remained pessimistic about local business conditions, with the index staying the same at -5. The average growth rates of prices paid decreased slightly, while the growth rate of prices received rose in February. Firms still expect both price indexes to increase in the next 12 months.

Expectations for future shipments and new orders both declined but remained in positive territory, suggesting that firms still anticipate improvement in these areas over the next six months but not as much as previously expected. Expectations for backlogs fell, moving from 17 to 3. Meanwhile, firms exhibited a more cautious approach to equipment and software spending, with expectations slipping from 3 to 0. Similarly, expectations for spending on capital expenditures edged down from 3 to 2. In sum, businesses in the Fifth District are growing more hesitant about the prospects for future growth.