By Xavier Fontdegloria

Manufacturing activity in the U.S. central Atlantic region expanded in January at the slowest pace since September, according to a survey from the Federal Reserve Bank of Richmond released Tuesday.

The Fifth District Survey of Manufacturing Activity's composite index fell to eight in January from 16 in December, missing economists' forecast of 15 in a poll carried out by The Wall Street Journal. A positive reading suggests that factory activity expanded.

The index is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.

Two of the three component indexes which form the composite indicator--new orders and employment--fell, while the shipments index rose slightly, the Richmond Fed said.

The new orders index fell to six from 17 the previous month, and the employment index declined to four from 19. The indexes signal that both new orders and employment grew slightly.

"Reported hiring moderated in January as fewer manufacturing firms increased employment compared to December," the Richmond Fed said. "Firms continued to report challenges finding the skills that they need".

The shipments index increased slightly to 14 from 12 in December.

The backlog of orders index dropped significantly in January, signaling that supply-chain bottlenecks could be easing. However, the index for vendor lead time edged up to 50 from 35 the previous month and inventories indexes remained near historic lows.

The average growth rate of prices paid and prices received increased in January, the report said.

Manufacturers in the region were optimistic about the short-term outlook, but less so than in December. The future indexes for shipments, new orders and employment all fell compared with the previous month, but remained well into expansion territory.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

January 25, 2022 10:51 ET (15:51 GMT)