Fifth District manufacturing activity weakened in December, according to the latest survey from the Richmond Fed. The composite index dropped from 14 in November to −8 in December, weighed down by drops in the indexes for new orders and shipments. At −25, the shipments index was its lowest reading since April 2009. However, the third component, the index for employment, rose. Respondents indicated a deterioration in local business conditions, as this index fell to −25, its lowest reading on record, but most firms were optimistic that conditions would improve.
Survey results suggested employment growth among many manufacturing firms in December, but firms continued to struggle to find workers with the necessary skills. Respondents expected this problem to continue in the coming months but anticipated continued employment growth as well.
Both prices paid and prices received by manufacturing firms grew in December. Growth of prices paid continued to outpace growth of prices received, although the gap narrowed slightly. Firms expected these trends to persist in the coming months.
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