Manufacturing activity in the Mid-Atlantic region of the country improved this month, according to new data from the Federal Reserve Bank of Philadelphia. Specifically, the 3rd Fed district’s general business conditions index jumped from -4.1 to 13.7 in March, significantly better than anticipated and the largest month-over-month increase in three years. Although this is just one of several regional activity gauges, the sharp rebound is a welcome turnaround from the prior months’ first dip into negative (contractionary) territory since 2016. Under the hood, measures of new orders, shipments, and hours worked strengthened in March, while profit margins and total employment eased.
Optimism about business conditions six months from now was a lot less encouraging, as outlooks for overall activity and capital expenditures deteriorated markedly. The forward-looking pessimism could in part be related to the still unresolved trade dispute with China, an unneeded headwind with a waning tax cut boost and economic growth outside the U.S. already having slowed considerably. Manufacturers in this month’s survey were also asked a few special questions about the tight labor market, and nearly three in every four respondents said that labor shortages have been a problem. Two-thirds of surveyed managers similarly indicated that there have been skills mismatches between job requirements and available labor, and roughly half of respondents reported that they had positions that have remained vacant for more than 90 days.
Sources: Econoday, FRBP
Post author: Charles Couch