A gauge of US manufacturing spikes to its highest in 16 months as the sector shows signs of life

Reuters

• The Richmond Fed’s regional manufacturing gauge spiked to 20, a level not seen since April 2018, Bloomberg reported.
• It’s a positive data point in a sector generally starved for good news.
• The increase is even more surprising in comparison to last month’s number, -5. That’s the largest month-to-month rise in the gauge since March 2016.

The factory sector got some good news Tuesday: The Federal Reserve Bank of Richmond’s regional manufacturing index leaped to to the highest level since 2018, Bloomberg previously reported.

The gauge — which measures manufacturing activity in Maryland, Virginia, North and South Carolinas, the District of Columbia and much of West Virginia — hit 20 in January. That’s up from -5 the month prior, the biggest month-to-month increase in the gauge in over three years. Dallas, Philadelphia, and New York gauges all rose in January versus December as well.

The data provide a point of relief for a sector where the dominant narrative has been decline. To be sure, some other numbers out Tuesday reaffirmed that theme: Core capital goods orders fell 0.9%, according to the Commerce Department. Also Tuesday, the conglomerate 3M, which operates in the manufacturing among other sectors, announced it would cut 1,500 jobs from its workforce. It announced it would made similar cuts less than a year ago, in April 2019, The Wall Street Journal reported.

But at the Richmond Fed, numbers were considerably more promising. Employment rose faster than it has since March 2019, and its measure of shipments rose to the highest level since 2004.