Richmond Fed: Manufacturing Activity Softened in February

Federal Reserve Bank of Richmond (02/22/22)

Mid-Atlantic manufacturing activity softened in February, according to the Federal Reserve Bank of Richmond. The composite index dropped from eight in January to one in February, due to declines in the indexes for shipments and new orders. Both indexes turned negative, with the shipments index dropping notably to -11 in February from 14 in January. However, the third component in the composite index, employment, increased to 20 from four in January. Firms reported decreases in order backlogs, as the index became negative for the first time since June 2020. Vendor lead times increased for many firms as that index remained at near-historic highs. Firms’ perceptions about changes in local business conditions remained slightly negative; however, firms remained optimistic about future conditions.

Reported hiring increased in February as more manufacturing firms increased employment. Firms continued to report increasing wages while also citing challenges finding workers with the necessary skills. Firms expect this challenge to last for at least the next six months as the expectations index remained in negative territory.

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