Input Stories

Manufacturing activity in the Fifth District slowed in March. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. The composite manufacturing index returned to -4 from 6 in February, led by a significant drop in the shipments index. Manufacturers are also less optimistic looking ahead, with the outlook for future local business conditions falling from 2 in February to -22 in March.

Among its components, shipments decreased from 12 to -7, which led the overall drop in the composite index. New orders fell from 0 to -4. Employment declined from 9 to -1, indicating hiring dropped in March. The vendor lead time index increased from 2 to 12 in March, while the share of firms reporting backlogs grew from -6 to -1. Companies felt more pessimistic about local business conditions, with the index falling from -5 to -13. The average growth rates of prices paid increased, and the growth rate of prices received also rose, but at a slower rate. Firms still expect both price indexes to increase in the next 12 months, with a significant uptick in input prices.

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 3 to -6. Meanwhile, firms exhibited a more cautious approach to equipment and software spending, with expectations slipping from 0 to -8. Similarly, expectations for spending on capital expenditures fell from 2 to -2. In sum, businesses in the Fifth District are growing more hesitant about the prospects for future growth.