Manufacturing activity in the Fifth district expanded for the eighth consecutive month in June and bounced back to a stronger pace after May's sharp slowdown, with the Richmond Fed Manufacturing Index rising 6 points to 7, roughly in line with analysts' expectations. Leading the recovery were shipments, which rose 13 points and was back in expansionary mode at plus 11 in June after dropping sharply in the previous month. The volume of new orders also improved, rising 6 points to 6, as did the backlog of orders, rising 11 points to minus 4, and capacity utilization, up 10 points to plus 1.
But the drag on the June improvement surprisingly came from the employment front, which showed the strongest component in May, wages, dropping 14 points to a plus 9. The average workweek fell 2 points further into negative territory at minus 5, and the number of employees was down 1 point to 5.
Looking ahead, manufacturing executives were even more optimistic than the considerable optimism expressed in May. Among indexes of expected activity, only capital expenditures and shipments declined, down 8 points to 26 and down 1 point to 38, respectively.
On the price front, manufacturing executives reported that prices paid as well as prices received moderated in June. Expected growth in prices received also moderated, though prices paid were expected to grow at a slightly faster pace.