Richmond Fed’s manufacturing survey exploded from -4 to 22 in March, beating expectations of 0 by the most ever). This is the 3rd highest print ever (in 23 years) driven by the highest level of New Orders in 6 years. Inventories tumbled, prices paid and received jumped, and expectations for future orders surged (despite stagnation in expectations for jobs).







As everything exploded…


From the survey:


Fifth District manufacturing activity expanded in March, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders increased this month. Employment advanced at a slightly faster pace in March, while average wages grew moderately and the average workweek lengthened. Prices of raw materials and finished goods rose at a faster pace compared to last month. Manufacturers anticipated robust business conditions during the next six months. Firms expected faster growth in shipments and in new orders in the six  months ahead. Additionally, survey participants looked for increased capacity utilization and expected order backlogs to grow. Producers looked  for vendor lead times to lengthen modestly.  Survey participants’ outlook for the months ahead also included faster growth in average wages and the average workweek, with a pickup in hiring during the next six months. Over the next six months, manufacturers expected faster growth in prices paid and received.


Current Activity


Overall, manufacturing activity increased markedly in March. The composite index for manufacturing  climbed to a reading of 22, the highest since April2010. The index for shipments added 38 points and the new orders index advanced 30 points, finishing at strong readings of 27 and 24, respectively. Manufacturing employment grew at a slightly faster pace this month; the employment indicator added two points to end at 11. Backlogs flattened this month. However, the index moved up from last month’s -14 reading to settle at 1. Capacity utilization grew at a faster pace in March, pushing the index up 22 points and ending at 17. Vendor lead time also leveled off to a reading of 0 this month. Finished goods inventories rose at a somewhat slower pace compared to a month ago. That index lost two points, ending at a reading of 18. Additionally, raw materials inventories increased at a slower pace in March. That gauge moved down to 21 from 36.

The spikes in New Orders, Average Workweek, and headline data all mark extreme cyclical tops in history:, so this “good” news seems like terrible cycle news… or did we just see the first triple-seasonal adjustment.