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Fifth District Survey of Manufacturing Activity

January 24, 2023

Fifth District manufacturing firms reported some deterioration in business conditions in January, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index fell noticeably into negative territory, decreasing from 1 in December to −11 in January. Each of its three component indexes: shipments, new orders, and employment declined, with the index for new orders plummeting from −4 to −24 in January. Alongside a slightly negative employment index, the wage index increased from 37 to 41 in January.

The local business conditions index also decreased somewhat, moving further into negative territory with a reading of −13 in January. Although the local business conditions expectations index rose slightly from December, firms generally reported pessimism about conditions over the next six months.

January survey results indicated continued easing of supply chain constraints. The index for order backlogs retreated further into negative territory, indicating that businesses continued to see declining backlogs. Meanwhile, the index for vendor lead time also remained well below 0, suggesting a continued decline in lead times.

The average growth rates of both prices paid and prices received decreased in January. Expectations for both price growth measures over the next 12 months also decreased to a level much lower than last year.

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