Richmond Fed Turns Handily South in January

The Federal Reserve Bank of Richmond has released its Regional Survey of Business Activity. The bank showed that the service sector activity improved and was bolstered by nonretail services. It also showed that the current outlook is now more optimistic. Unfortunately, the reading overall for January was negative and well under expectations.

Today's overall index was -12 for the Richmond Fed's survey for January, lower than a reading of 5 in December and lower than the Bloomberg consensus of 5 as well. The range of estimates from Bloomberg's economist polling group was 3 to 13, so this was worse than all expectations. The only good news is that the Richmond Fed reading is generally considered to be a confirming of trends in general rather than a leading market indicator.

Manufacturing shipments were -12 in January, versus 6 in December. The services index was 13 in January, versus -2 in December. Retail revenues were -8 in January versus -13 in December. Below were some general comments from the report:

The headline index is the composite for current month activity and it is a weighted average designed by the following: shipments (33%), new orders (40%) and employment (27%) indexes. As a reminder, the Richmond Federal Reserve Bank is under Jeffrey Lacker and he has been the most vocal dissenter of easy-money monetary policy promises of the FOMC.

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