Yesterday, the Richmond Fed released its diffusion indices which measure activity in that district’s Manufacturing and Services sectors. Following strong readings from Empire Manufacturing (NY Fed District) and Philly Fed indices, the Richmond Fed’s Manufacturing index also exploded higher, with close to across-the-board improvement as shown in the table at left.
This series is extremely volatile and can only be of limited use in terms of gauging growth or as a leading indicator for broad manufacturing activity on a national basis. It only covers the states of Maryland, West Virginia, Virginia, North Carolina, and South Carolina (as well as the District of Columbia). However, we were struck by how large and broad the improvement was in March, with explosions higher in a number of series that had previously been indicating clear contraction in Manufacturing activity. Below we chart some of those changes in the series that moved the most. Both the composite and shipment series had their largest MoM changes on record, while new orders and capacity utilization were 99th percentile moves. If these gains in activity hold, we will receive further confirmation that the manufacturing sector of the economy is emerging from the near-recessionary conditions that were the order of the day for the last year or so.
The bounce wasn’t just limited to manufacturing, either. The Services sector index of the Richmond Fed’s activity readings was also strong with robust gains for revenues, employment, wages, and expected demand. Activity in the retail sector for the region also showed strength with much higher sales, strong employment gains, and upticks in traffic (shoppers), big ticket sales, and expected demand in the Richmond Fed’s district for March.
In the series of charts below, we show the long-term charts of select Manufacturing and Services indices from the Richmond Fed.