The signs of a strengthening manufacturing sector seen in reports from regional Federal Reserve banks were absent in a report issued Tuesday by the Federal Reserve Bank of Richmond.
The bank’s index of manufacturing activity fell to negative 2 in February from a positive 20 in January. Positive readings indicate expansion while negative readings indicate contraction.
Economists had been expecting a positive 10 reading.
The decline was broad. All components of the index–shipments, new orders and employment–fell.
Reports from the New York, Philadelphia, and Dallas Feds last week painted a picture of expanding manufacturing activity. But that does not appear to be the case in the region covered by the Richmond Fed, which includes Virginia, North Carolina, South Carolina, the District of Columbia, Maryland and most of West Virginia.
There was some silver lining in the report. The gauge of local business conditions remained positive and optimism about activity in the near-term future also held up.
The measure of wages ticked up–as did employer complaints about finding qualified workers. These things are likely related. Oddly, however, the average workweek turned negative.