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Richmond Fed's Current Activity Index down 16 to -17
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The pullback in manufacturing activity in the central Atlantic region deepened in July, after edging lower in June, according to the Richmond Fed's latest seasonally adjusted survey. The index of overall activity was pushed lower as shipments and new orders declined further into negative territory. Employment remained in positive territory, but grew at a pace below June's rate. Other indicators also suggested additional softness. District contacts reported that backlogs, capacity utilization, and delivery times continued to contract. Moreover, manufacturers reported that finished goods inventories grew at a much quicker pace, while raw materials were nearly unchanged.
Looking ahead, manufacturer's optimism regarding future business prospects dropped considerably in July. An increasing number of firms anticipated slower growth across the board with the exception of capital expenditures, which grew at a pace slightly above June's rate.
Survey assessments of current prices revealed that both raw materials and finished goods prices grew at a somewhat slower rate in July than a month ago. Over the next six months, respondents expected growth in both raw materials and finished goods prices to grow at a somewhat slower pace than they had anticipated last month.
In July, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell sixteen points to −17 from June's reading of −1. Among the index's components, shipments declined twenty-three points to −23, new orders dropped eighteen points to end at −25, and the jobs index moved down seven points to 1.
Other indicators also suggested weakening activity. The backlogs and capacity utilization indexes weakened further — losing thirteen and twelve points, respectively — to finish at −27 and −16. Additionally, the delivery times index moved down three points to −5, while both our gauges for inventories were somewhat higher in July. Indexes for finished goods inventories added twelve points to end at 21, while raw materials inventories edged up two points to finish at 23.
Posted: July 24, 2012 Tuesday 10:00 AM