The Fifth District economy is advancing at a very modest pace. Economic activity in the service sector grew moderately in October while activity in the manufacturing sector declined. The labor market remained healthy in September with solid private payroll employment growth and a low unemployment rate.

Fifth District manufacturing activity was flat on balance this month following an uptick in March, according to the Richmond Fed’s April survey. The overall index flatlined as growth in factory shipments and new orders tapered off and factory employment contracted further. Most other indicators also suggested additional softness. Consistent with generally sluggish activity, delivery times reversed the positive reading posted last month. Our gauges of capacity utilization and orders backlogs moved lower as well. In addition, manufacturers reported that growth in inventories remained on pace with March.

Looking forward, assessments of business prospects for the next six months were generally on par with last month’s readings. Firms looked for slower growth in shipments and new orders, but looked for an uptick in capacity utilization.

On the price front, growth in prices paid remained elevated in April and prices received rose at a quicker pace. Looking ahead, respondents indicated that they expected price growth to advance a bit more slowly during the next six months than they had anticipated last month.

Continued weakness in retail sales combined with nearly flat revenues at services-producing firms kept service sector indicators in slightly negative territory in April, according to the latest survey by the Federal Reserve Bank of Richmond. Declining big-ticket sales continued to drag down overall retail sales, although the decline lessened compared to a month ago. Shopper traffic also declined at a more moderate pace, even as retail inventories shrank more rapidly. At services-producing firms, revenue growth slowed in April. Looking ahead six months, retailers were nearly neutral about their expectations for consumer demand, while contacts at services firms remained generally upbeat.

In District labor markets, retailers slashed jobs and services producers added a modest number of workers—both changes were on pace with the previous month. Wage growth in the service sector was also little changed from a month ago.

Price growth slowed in April at both retail and services businesses. However, retailers and services contacts anticipated sharper price growth over the next six months, as they did last month.