The Federal Reserve Bank of Richmond released the manufacturing index data for the Richmond area for the month of December on Tuesday. The data met market expectations; however, the index continued to contract for the seventh consecutive month.
The data showed that the manufacturing index contracted to -10 points, while forecasts had anticipated a contraction to just -10 points. The previous reading for the Richmond manufacturing index recorded a contraction of -14 points in November.
It is worth noting that the Richmond Index conducts a survey of about 100 manufacturers in the Richmond area, where participants are asked to estimate the relative level of business conditions, including shipments, new orders, and employment. The Richmond Index is released regularly during the fourth week of each month.
The importance of the Richmond Index has increased recently due to the impact on the American manufacturing sector resulting from the slowdown in U.S. growth due to the rapid pace of interest rate hikes. If the value of the Richmond Index is above zero, it indicates an improvement in conditions, while a value below zero indicates poor conditions. It tends to have a weak impact because there are regional indicators related to manufacturing conditions that have been released earlier.
