Tuesday, September 28, 2010

Richmond Fed: Regional manufacturing activity contracted after seven months of expansion

by Bill McBride on 9/28/2010 10:00:00 AM

Note: Usually I don't post all the regional manufacturing surveys, however with the inventory adjustment over, export growth slowing, and domestic consumer demand sluggish, these surveys provide an early look at weakness in the manufacturing sector.

From the Richmond Fed: Manufacturing Activity Pulled Back in September, But Expectations Upbeat

Manufacturing activity in the central Atlantic region pulled back in September after expanding during the previous seven months, according to the Richmond Fed's latest survey. The index of overall activity was pushed lower as shipments and employment edged into negative territory. Other indicators also suggested softer activity. District contacts reported that the volume of new orders flattened, order backlogs turned negative, and delivery times held steady. Furthermore, manufacturers reported growth in capacity utilization flat lined, while inventories grew at a slightly quicker pace.
...
In September, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — turned negative, losing thirteen points to −2 from August's reading of 11. Among the index's components, shipments fell fifteen points to −4, new orders lost ten points to finish at 0, and the jobs index declined fifteen points to −3.

Other indicators also suggested weaker activity. The backlogs of orders measure turned negative losing eleven points to −11, and the index for capacity utilization flattened declining fourteen points to 0. The delivery times index held steady at 8, while our gauges for inventories were somewhat higher in September.
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Labor market activity also weakened in September. The manufacturing employment index registered a −3 versus August's reading of 12, and the average workweek measure lost fourteen points to 0. In addition, wage growth posted a five-point loss to 8.
This is further evidence of the slowdown in manufacturing.

Also, from CNBC: Consumer Confidence Falls to Lowest Level Since February
The Conference Board, an industry group, said its index of consumer attitudes fell to 48.5 in September from a revised 53.2 in August.