Tuesday, August 23, 2011

Richmond Fed: Economic Activity Weakened in August

The Federal Reserve Bank of Richmond reported that economic activity retreated in August, according to its surveys of manufacturing and service sector activity.

Manufacturing activity in the Fifth Federal Reserve District pulled back in August after stalling in July, as the composite index of manufacturing activity declined nine points to −10 from July's reading of −1.

The index of overall activity was pushed lower as growth in new orders and shipments declined further into negative territory. Employment remained in positive territory but grew at a pace below July's rate.

Other indicators also suggested weakening manufacturing activity, as backlogs and capacity utilization continued to contract, while delivery times turned negative. Moreover, manufacturers reported that inventory building remained on pace with July.

Looking ahead, manufacturers' optimism regarding future business prospects dropped considerably in August. An increasing number of firms anticipated slower growth and are scaling back hiring plans.

The service sector also retreated in August. Retail sales fell and retail inventories inched up. Non-retail services firms reported the revenues edged higher, compared to July. Retailers had a bleak outlook for sales in the six months ahead, while non-retail firms were mildly optimistic about demand for their services.

The number of employees in the service sector dipped as retailers and non-retail services providers trimmed their payrolls.

Read the Manufacturing Activity Survey.

Read the Service Sector Activity Survey.

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