Tuesday, July 28, 2020

Richmond Fed: "Manufacturing in the Fifth District showed signs of recovery in July"

by Calculated Risk on 7/28/2020 10:03:00 AM

From the Richmond Fed: Manufacturing in the Fifth District showed signs of recovery in July

Manufacturing in the Fifth District showed signs of recovery in July, according to the most recent survey from the Richmond Fed. The composite index rose from 0 in June to 10 in July, its first positive reading since March, buoyed by increases in all three components. The indexes for shipments and new orders suggested expansion, while the third component index—employment— remained slightly negative. The local business conditions index rose further, suggesting some improvement in sentiment. Survey respondents were optimistic that conditions would improve in the next six months.
emphasis added
This was the last of the regional Fed surveys for July.

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

The ISM manufacturing index for July will be released on Monday, August 3rd. The early consensus is for the ISM to increase to 53.4, up from 52.6 in June. Based on these regional surveys, the ISM manufacturing index will likely increase in July.

Note that these are diffusion indexes, so returning to 0 (or 50 for ISM) means activity is not declining further (it does not mean that activity is back to pre-crisis levels).