The manufacturing activity in the central Atlantic region of the United States saw a slight worsening in July, according to data from the Federal Reserve Bank of Richmond. This sluggishness can be attributed to tight financing conditions caused by high interest rates.
The Fifth District Survey of Manufacturing Activity’s index dropped marginally to -9 in July, compared to -8 in June. However, this was slightly better than the -10 expected by economists in a poll conducted by The Wall Street Journal.
The index is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.
Two of the three component indexes that form the composite indicator, namely shipments and new orders, experienced slight declines from the previous month. This indicates that demand continues to remain subdued.
On a positive note, the employment index, which is another component used to calculate the overall indicator, improved to 5 in July from -1 in June. This suggests an improvement in employment levels within the manufacturing sector.
In terms of prices paid and prices received, the growth rate fell slightly in July. However, firms expect both growth rates to moderate over the next 12 months, according to the Richmond Fed.
Despite these mixed results, firms in the region remain pessimistic about local business conditions. The index for future local business conditions has edged downward but still remains in positive territory, according to the Richmond Fed.