Contraction in U.S. Mid-Atlantic Factory Activity Slowed in March

By Xavier Fontdegloria

Manufacturing activity in the U.S. central atlantic region continued to contract in March, albeit at a softer pace compared with the previous month as demand remained subdued.

The Fifth District Survey of Manufacturing Activity's index rose to minus 5 in March from minus 16 in February, which marked the lowest level since the onset of the Covid-19 pandemic, according to data from the Federal Reserve Bank of Richmond released Tuesday.

The reading beats economists' consensus estimate of minus 10 in a poll by The Wall Street Journal.

The indicator suggests that activity among goods-producers in the region contracted at a slower rate compared with the previous month, as it came in closer to the no-change threshold of zero. The survey has signaled declining or stagnating factory activity since May 2022.

The index is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.

Two of the three component indexes which form the composite indicator--new orders and employment--remained in contraction territory in March, while the shipments index swung to expansion, driving the increase of the headline indicator.

The shipments index rose to plus 2 from minus 15, signaling a slight increase in shipments. Another demand-related indicator, the new orders index, remained negative but improved to minus 11 from minus 24, suggesting that orders fell at a softer pace than in February.

The employment index rose slightly to minus 5 from minus 7 a month earlier, pointing to slight job losses among manufacturers.

Firms continued to report easing of supply-chain bottlenecks, while inflation pressures eased somewhat over the month, the Richmond Fed said.

Goods producers remained pessimistic about local business conditions in March, while they also turned slightly more downbeat when assessing their outlook for the next six months, data from the survey showed.

Write to Xavier Fontdegloria at [e-mail]

(END) Dow Jones Newswires

03-28-23 1036ET