Manufacturing activity in the fifth Federal Reserve district continued to slow in April. Data released by the Richmond Fed on Tuesday morning showed that its seasonally-adjusted index of manufacturing activity — its broadest measure of manufacturing — fell nine points to -6, driven lower by weakness in factory shipments and new order volume.
Shipments alone fell 17 points to -9, while the measure for new orders lost four points to -8. April’s slowdown follows a reduction of activity in March. Capacity utilization fell for a second month, losing 15 points to -18.
All told, this Fed survey paints a fairly underwhelming picture of the U.S. economic recovery. Strong corporate earnings fueled market gains on Tuesday, but modest manufacturing data from the Richmond survey and the flash PMI from Markit could inspire investors to take profits when the earnings bonanza cools down.
Looking ahead, the survey indicates that its survey contacts were less optimistic about conditions six-months out than they were a month ago. The index for expected shipments fell six points to end at 25, while the new orders index fell five points to end at 26. What’s more, the employment index fell 16 points to end at zero.
Manufacturers within the district reported that prices increased at an average annual rate of 1.27 percent in April, which is pretty much unchanged from March. Finished goods prices climbed 0.15 percent, slightly below March’s reading of 0.54 percent.
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