News & Insights

Manufacturing activity in the Fifth District stayed the same in March after declining in February, with the composite manufacturing index increasing from -10 to 0. At the same time, the local business conditions index advanced from -15 to -5 in March. Despite an improvement in the headline index in March, manufacturers are slightly less optimistic about the future, with the outlook for future local business conditions falling from 22 in February to 16 in March. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained negative but contracted at a slower pace, rising from -13 to -2, while new orders turned positive, climbing from -9 to 4. The indexes for employment and vendor lead times grew in March, moving from -7 to -2 and from -1 to 13, respectively. Meanwhile, the share of firms reporting backlogs improved slightly, increasing from -14 to -10. At the same time, the average growth rate of prices paid slowed in March while the average growth rate for prices received accelerated from February.

Looking ahead, firms expressed an expectation that both price indexes would increase in the next 12 months but at a slower pace than forecasted in February. Expectations for future shipments and new orders remained positive but declined from 29 to 26 and from 35 to 30, respectively. Expectations for backlogs ticked down from 6 to 3. Meanwhile, firms’ expectations about equipment and software spending turned negative, falling from 2 to -2. In sum, businesses in the Fifth District remained optimistic about future business conditions but became slightly pessimistic about future investment plans.