News

Manufacturing activity in the Fifth District remained sluggish in January. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. Although it remained negative, the composite manufacturing index improved from -10 in December to -4 in January.

Among its components, shipments increased from -11 to -9, and new orders rose from -11 to -4. Employment turned positive, improving from -8 to 3, indicating hiring increased in January. The vendor lead time index was relatively unchanged, slipping from 11 to 10 in January, and a smaller share of firms reported declining backlogs, with the index increasing from -13 to -5. Companies grew somewhat more pessimistic about local business conditions, with the index moving from 0 to -5. The average growth rates of prices paid and prices received decreased slightly in January, but firms still expect both to rise 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 improved slightly, from 14 to 17. The outlook for future local business conditions fell from 40 to 32. Meanwhile, firms exhibited a more ambitious approach to equipment and software spending, as expectations improved from -7 to 3. Similarly, expectations for spending on capital expenditures grew from 0 to 3. In sum, businesses in the Fifth District remain cautiously optimistic about consumer demand improving in the near future but expect their own expenditures to grow.