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Economy in Brief

Richmond Fed MFG Index Rose to -10 From -11
by Robert Brusca May 22, 2007

The Richmond Index rose by one point to a still very weak -10. The chart on the left puts the index in context, plotting the 12-month moving average vs 2-year trailing maximums and minimums, forming a tunnel. At -11 the Richmond MFG index is coming off a 2-year low and has not risen off that low very robustly.

Looking back, the weakness seen in Richmond in the monthly index is similarly to the sort that preceded that last recession. The 12-month average however is not nearly that low. Still the degree of weakness in Richmond MFG is clearly established and is not minor. These are not spike lows, but lows that persist.

The ranges below show that the current MFG readings are quite low in their respective ranges. Among the current readings only wages and prices are above the midpoint in their ranges. The forward-looking indexes show some firmness in jobs hours and prices.

The Richmond services report is substantially stronger. Expected production is very strong. Current readings are firm to strong. The surveys - with or without retailing show that the service sector firmness is widespread. Readings are generally above the midpoints of their ranges. Wage readings are the relative weakest within their ranges. Revenues are firm. Employment is strong. The outlook index is upbeat in stark contrast with conditions in MFG.

Richmond MFG Index
Since Nov 1993 May-07 Apr-07 Percentile of own range
Component Levels Levels Current 6-mos Ahead
Index -10 -11 30.4% 36.9%
Shipments -7 -11 32.7% 37.9%
New Order -13 -14 24.1% 34.4%
backlogs -18 -13 39.1% 48.6%
Capacity -17 1 13.6% 43.9%
Vendor Speed -1 -6 15.4% 36.8%
Employees -9 -14 43.6% 64.3%
Workweek -9 12 26.8% 51.2%
Wages 16 27 69.6% 29.7%
Inventories
Finished Goods 21 19 42.9% --
Raw Materials 12 0 47.8% --
Prices Paid 2.62 0.94 63.8% 82.8%
Prices Received 1.5 0.94 62.7% 45.0%
Capital Expenditures 16 14 -- 40.0%
Richmond Seasonally Adjusted Services Index
    Number of Average Prod expected next
  Revenues employees wage six months
May-07 7 9 21 62
Apr-07 5 0 19 80
avg 10 2 19 33
max 45 20 39 66
min -34 -25 3 1
%range 51.9% 75.6% 50.0% 93.8%
Richmond Services Excluding Retailing
%range 59.0% 73.5% 42.5% 40.8%
Richmond Services - Retail
%range 64.0% 61.2% 42.4% 87.3%
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