Richmond Fed Manufacturing Index: A Bit Stronger But Very Volatile

| About: SPDR Dow (DIA)


The manufacturing index increased 8 points.

New orders support strength after growing 19 points.

Shipments remain very weak, while employment stays positive with only one month of contraction since 2014.

Every month, I write about several Federal reserve districts. Federal reserve districts publish important information about the manufacturing sector in each district. I use this data to get a better overview of the US economy and to predict economic activities. Note that single reports are very volatile. The information is useful, but the best use comes at the end of each month, when I update my average indicators of every important topic.

The economic indicators are:

  • Composite Manufacturing Index
  • New Orders
  • Shipments
  • Employment
  • Capital Expenditures

Source: Federal Reserve Education

The economic indicators above couldn't be more useful. At the end of each month, we have a very reliable and valid set of indicators. In addition to that, we see that average indicators erase all unnecessary volatility. The averages are about the following districts:

  • Empire State (New York)
  • Philadelphia
  • Kansas City
  • Richmond
  • Dallas

This article discusses the November results of the Fed's Richmond district.

The manufacturing index showed finally some strength. The manufacturing index increased 8 points and hit 4 in November. This was desperately needed since Richmond has underperformed most other regional indices during the last few months.

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New orders are up 19 points after three months of contraction. The current value of 7 supports a stronger manufacturing index. I hope that new orders keep these levels to show signs of sustainable strength.

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Shipments are one point lower than one month ago. Shipments are both weak and volatile. This doesn't indicate any strength whatsoever unfortunately.

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The interesting thing in the Richmond district is that overall growth remains rather weak, while employment stays positive. Most districts are the other way around. Employment is up 2 points from 3 in October to 5 in November. Richmond has only had one month of contraction since the ISM peak in 2014.

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The Richmond district showed some more strength in November. Growth is not high, but this uptick was desperately needed. New orders increased too, and should keep these levels. Shipments disappointed and haven't shown any serious strength since the ISM peak. Employment stays positive which supports the next nonfarm payroll number. After the next Dallas Fed numbers, I will publish my article with averages in order to give a less volatile and reliable outlook of the economy. Especially of the ISM manufacturing index.

Many thanks for reading my article. Please leave a comment below if you have questions or remarks.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.