News

Manufacturing activity in the Fifth District deteriorated in September, and at a faster pace than the previous month, with the composite manufacturing index dropping from -7 to -17. Meanwhile, the local business conditions index fell from 0 in August to -12 in September. Despite worsening conditions, manufacturers are less pessimistic about the future, with the outlook for future local business conditions rising from -10 in August to -1 in September. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative and contracted at a faster pace in September, dropping to -20, -15 and -15, respectively. The vendor lead time index stepped down from 11 in August to 10 in September. Meanwhile, the share of firms reporting backlogs worsened, falling from -12 to -21. The average growth rate of prices paid declined slightly, while growth in prices received increased in September.

Looking ahead, firms still expect both price indexes to rise in the next 12 months, with prices paid rising at a slower rate and prices received at a faster rate than forecasted in August. Expectations for future shipments decreased from 13 to 0, while new orders inched down from 9 to 8. Expectations for backlogs improved slightly, moving from -10 to -8. Meanwhile, firms’ expectations about equipment and software spending remained negative but improved to -9 from -18. Expectations for capital expenditures also stayed negative but stepped up to -11 from -15 in August. In sum, businesses in the Fifth District are slightly more optimistic about prospects for future growth, but they are still avoiding making new investment plans.