Manufacturing activity in the Fifth District expanded for the fourth consecutive month in February, with the Richmond Fed Manufacturing Index rising a strong 5 points to 17. Strength was broad based, with the shipments reading rising 3 points to 16 and the volume of new orders index gaining 9 points to 24. Backlog of orders picked up, rising 4 points to 8, and vendor lead times also strengthened by 4 to 9. The reading for capacity utilization nearly doubled, up 7 to 15.
Employment components also contributed to strength, with the number of employees index rising 2 to 10, the average workweek index up 11 to 16, and wages up 4 to 15.
Looking ahead, manufacturing executives increased their expectations of robust business conditions, with growth in shipments, up 3 points to 53, new order volumes, up a sharp 11 points to 54, along with higher capacity utilization, up 12 points to 46. Only vendor lead times are expected to moderate, down 4 points to 8. The outlook on employment showed a decline by 4 points to a net 23 percent in those executives expecting an increase in the number of employees, while those expecting wage growth fell by 1 point to a net 30 percent.
Survey respondents expected input prices to rise at a slightly faster rate over the next six months, though they expect a slightly slower pace in the growth of prices received than they did a month ago.