Richmond Fed manufacturing index holds at -2 in October, matching forecasts

• Manufacturing shipments came in at 0, improving from -5 in the prior month.

Additional details:

• Employment dropped to 3 from 7 a month earlier.

• Wages rose to 20 versus 17 previously.

• Prices paid edged up to 7.12 from 7.08 last month.

• Prices received increased to 5.27 compared with 4.19.

• New orders fell to -8 from -6.

• The backlog of orders worsened to -21 versus -10.

• Capacity utilization remained unchanged at -7.

• Capital expenditures declined to -12 from -7.

• Services expenditure slipped to -19 from -10.

• Finished goods inventories held steady at 4.

• Raw materials inventory declined to -2 from 6.

• Equipment and software spending went to -8 from -4.

The reading is middling and typically has little market impact. Price data suggests stabilization.

As background, the Richmond Fed's Fifth District Survey of Manufacturing Activity monitors factory conditions monthly across Maryland, Virginia, North Carolina, South Carolina, the District of Columbia, and most of West Virginia. It is released at 10 am ET, usually on the fourth Tuesday of the month, alongside the bank's companion survey of service sector activity.

The headline figure is a composite index that is a weighted average of new orders, shipments, and employment. As with other regional Fed surveys, each component is a diffusion index computed as the share of firms reporting an increase minus the share reporting a decrease, so zero marks the threshold between expansion and contraction.

In addition to the composite, the survey tracks order backlogs, capacity utilization, vendor lead times, wages, and local business conditions, each with a six-month-ahead expectations index. Its price data is presented differently from most regional surveys: rather than a diffusion index, firms report the annualized growth rate of prices paid and prices received, giving a direct read on how fast costs and selling prices are rising, along with expectations for the next 12 months.

The district's manufacturing base leans toward furniture, textiles, chemicals, food processing, and transportation equipment, providing insight into industrial segments that are less prominent in Texas or New York.

The Richmond survey is among the smaller regional reports and rarely moves markets on its own. Its value lies in rounding out the regional picture alongside the Empire State, Philadelphia, Kansas City, and Dallas surveys before the national ISM manufacturing index is released.