By Xavier Fontdegloria

 

Manufacturing activity across the central Atlantic region of the U.S. accelerated its expansion pace in September and reached a two-year high, data from a survey from the Federal Reserve Bank of Richmond showed Tuesday.

The Fifth District Survey of Manufacturing Activity's composite index came in at 21 in September, up from the 18 reading registered in August. The indicator beat forecasts from economists polled by The Wall Street Journal, which expected the index to be at 14.

The indicator is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. Positive readings signal expansion, while negative readings indicate contraction.

September's reading posts a fifth consecutive month of improvement for the index, which plunged to a record low of minus 53 in April amid the lockdown to contain the spread of the coronavirus. The index stands now at the highest level since September 2018.

Two of the three components of the index -- new orders and employment -- were above their August levels. Volume of new orders increased strongly to 27 from 15 a month earlier, and employment climbed to 23 from 17 in August.

The remaining component, shipments, decreased to 13 from 22 a month earlier, but remained in positive territory, signaling expansion but at a slower pace than that of the previous month.

Survey results also reflected improvement in local business conditions and increased capital spending. Respondents were optimistic that conditions would continue to improve in the next six months, the Richmond Fed said.

The survey reflected higher employment among many participants in September and suggested several manufacturers raised wages over the month, the report said.

 

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

 

(END) Dow Jones Newswires

September 22, 2020 10:35 ET (14:35 GMT)

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