By Xavier Fontdegloria
Factory activity in the U.S. central Atlantic region contracted in January after eking out a small gain in December, signaling that manufacturers' headwinds extended to the new year as demand for goods waned amid rising interest rates.
The Federal Reserve Bank of Richmond said Tuesday that the Fifth District Survey of Manufacturing Activity's index decreased to minus 11 in January from 1 in December, the lowest level since May 2020 and missing the minus 3 consensus forecast from economists polled by The Wall Street Journal. Any reading below zero signals contraction.
The indicator is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.
All three component indexes which form the composite index--new orders, shipments and employment--deteriorated in January.
The volume of new orders index fell sharply to minus 24 from minus 4, a sign of rapidly declining client demand. The shipments index also fell, albeit at a lesser pace, to minus 3 from 5.
The employment index decreased to minus 3 from 3 a month earlier, suggesting firms cut jobs on average amid the sharp fall in orders.
January survey results indicated continued easing of supply-chain bottlenecks, with both order backlogs and vendor lead times still contracting.
The average growth rates of both prices paid and prices received decreased, in a sign of abating price pressures at factory gates.
The local business conditions expectations index rose slightly from December, but firms continued to be pessimistic about conditions over the next six months, the Richmond Fed said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
01-24-23 1037ET
