The best that can be said about manufacturing activity in five regional Federal Reserve banks is that it has moved more or less sideways over the past three months.
This lackluster performance is consistent with the global slowdown in economic activity that is a response to tight monetary policies and geopolitical shocks to demand.
Read more of RSM’s insights on manufacturing, the economy and the middle market.
The only bright spots were the Philadelphia and Dallas regions, where businesses reported little change in activity during the month. Activity in the other regions remained subpar.
The result was a drop in the RSM US Manufacturing Outlook Index to 1.5 standard deviations below levels of manufacturing activity that would normally be expected.
Negative results in the index indicate decreased manufacturing activity, while positive results indicate increased activity. The index has been negative since May 2022.
Despite the decline in activity, firms appear to be maintaining their intentions to invest in competitiveness.
Most of the regions continue to support a rebound in capital expenditures and purchases of technology, although lately with a bit more trepidation.
New York
There was a modest decline in New York manufacturing activity for the month ending the first week of June. The modest increase in current shipments was countered by a small drop in new orders and the ongoing decline in employment levels and hours worked.
Delivery times shortened somewhat, and a new monthly indicator of supply availability was little changed.
The survey found that firms were more optimistic than they have been in more than two years. But the outlook for employment growth remained weak, and capital spending plans still appeared sluggish.
Responses were collected between June 3 and June 10.
Philadelphia
Manufacturing in the Philadelphia region was flat for the month ending the second week of June, with the general activity index barely positive and at its lowest point since January.
Current shipments slowed further, while new orders and employment indicators moved closer to neutral but remained negative. Nearly three-quarters of firms, or 74%, continued to report no change in employment, with a modest share of firms reporting decreases.
Both prices paid and prices received increased on the month.
In special questions, 50% of firms reported an increase in production compared with the 25% that reported a decrease. The median current capacity utilization rate was unchanged at 70% to 80%.
Survey responses were collected from June 10 to June 17.
Dallas
Texas factory activity was flat for the month ending the third week of June, an improvement over last month’s modest decline.
Shipments increased, reversing last month’s slight decline. New orders troughed in January and have improved since but remained slightly negative in June. The capacity utilization index slipped a bit further and the number of employees decreased for the second month in a row, while capital expenditures fell to neutral.
Prices paid remained elevated and the finished goods prices index shot up.
In special questions, 37% of firms plan to increase capital expenditure in the next 12 months, 36% expect no change and 27% expect lower spending. Less than 13% of firms are experiencing supply chain disruptions or delays.
Responses were collected from June 10 to June 18, with 83 of the 125 Texas manufacturers surveyed submitting a response.
Richmond
Manufacturing in the Richmond district took a turn for the worse after last month’s jump in current shipments. But current shipments declined again and new orders have declined for nine straight months. Employment has dropped in all but two of the past seven months.
Firms continued to report declining backlogs and vendor lead times in June, suggesting continued easing in the supply chain. Still, the average growth rate of prices paid and prices received increased.
Results are based on responses from 65 to 72 firms within the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. Results were released on June 25.
Kansas City
Manufacturing activity in the Kansas City Fed region continued to decelerate in June. The decline was driven by paper, plastics, machinery and transportation equipment manufacturing.
While current shipments were basically flat, the downtrend in new orders has now lasted 23 straight months.
Firms also reported a substantial drop in employment from last month, with around a quarter of firms no longer posting new positions for workers. Still, employment remained expansionary compared to this time last year.
Capital expenditures were flat and firms reported that price growth for both raw materials and finished products cooled this month.
The survey from June included 97 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.
