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Economy in Brief

Richmond Federal Reserve Reports Continued Improvement in Activity
by Tom Moeller  September 23, 2014

The Federal Reserve Bank of Richmond reported that its September Composite Index of Manufacturing Sector activity improved to 14 from 12 in August. It was the highest level since February 2011. Driving the index higher was improvement in several component series. Leading the gains were the employment and the orders figures, each rising to the highest levels in over three years. Also firm were the shipments and the average workweek components. To the downside were the orders backlog, capacity utilization & vendor lead time series. The prices paid series gained modestly but remained in the range of the last two years. Finished goods inventory levels were shown to have soared.

Gauges of expected conditions in six months also remained strong, notably shipments, orders & employment, although slight m/m declines were registered for September. The wages series soared as did the indication of future capital expenditures.

The Richmond Fed also produces figures which gauge service sector performance. The revenue measure was unchanged m/m at the highest level since early-2012. The expected prices paid series also remained elevated. The employment, wage and product demand figures each remained down somewhat from the very recent highs.

The Richmond Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. The data is available in Haver's SURVEYS database.

Federal Reserve Bank of Richmond Survey Sept Aug Jul Sept'13 2013 2012 2011
Composite Factory Sector Diffusion Index (% Increasing) 14 12 7 0 2 2 4
   Shipments 11 10 3 -1 3 3 4
   New Orders Volume 14 13 5 3 -0 0 2
   Number of Employees 17 11 13 -3 2 3 7
   Prices Paid (%) 2.1 1.4 2.0 2.1 1.6 1.9 3.8
Service Sector (% Increasing)            
   Revenues 21 21 12 12 6 5 6
   Number of Employees 13 17 9 5 2 2 4
   Prices (%) 1.6 1.5 1.2 1.3 1.2 1.2 0.9
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