Global| May 22 2007Richmond Fed MFG Index Rose to -10 From -11
Summary
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 [...]
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.
| 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% |
| 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% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
