Tuesday, April 28, 2020

Richmond Fed: "Fifth District Manufacturing Activity Declined Sharply in April", Lowest Reading on Record

by Calculated Risk on 4/28/2020 10:03:00 AM

From the Richmond Fed: Manufacturing Activity Declined Sharply in April

Fifth District manufacturing activity declined sharply in April, according to the most recent survey from the Richmond Fed. The composite index plummeted from 2 in March to −53 in April, its lowest reading and largest one-month drop on record. All three components — shipments, new orders, and employment — fell, and the indexes for shipments and new orders reached record lows. Firms reported weakened local business conditions and expected conditions to remain soft in the next six months.

Survey results reflected a deterioration in employment conditions in April. More contacts reported drops in employment and average work week, although the wage index remained flat. Manufacturers expected these conditions to persist.
emphasis added
This was the last of the regional Fed surveys for April.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through April), and five Fed surveys are averaged (blue, through April) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through March (right axis).

The ISM manufacturing index for April will be released on Friday, May 1st. The consensus is for the ISM to decline sharply to 36.7, down from 49.1 in March. Based on these regional surveys, the ISM manufacturing index might even be lower than the consensus in April.