Richmond Fed November manufacturing index -9 vs. -9 estimate

• Prior month -10 (expected -5)
• Manufacturing composite index for November
• Services index -2
• Shipments -8 vs. -3 last month
• new orders -14 vs -22 last month
• prices paid 10.19 vs. 1221 last month
• prices received 9.91 vs. 8.62 last month
• number of employees -1 vs 0 last month
• wages 25 vs. 34 last month
• availability of skills needed -12 vs. -14 last month
• backlog of orders -25 vs. -28 last month
• capacity utilization -16 vs. -9 last month
• lender lead times -10 vs. -15 last month
• local business conditions -6 vs. -16 last month
• capital expenditures 8 vs. 18 last month
• finished goods inventories 1 vs. -2 last month
• raw materials 24 vs. 20 last month
• equipment and software spending 12 vs. 12 last month
• services expenditures -9 vs. 4 last month

Looking and expectations six-month forward:

• shipments 15 vs. -4 last month
• new orders 3 vs. -16 last month
• backlog of orders -20 vs. -25 last month
• employees 20 vs. 10 last month
• wages 55 vs. 47 last month
• availability of skills needed 1 vs. -16 last month
• capital expenditures 20 vs. 8 last month
• lender lead time -15 vs. -24 last month

From the Richmond Fed:

Of its three component indexes,
the indexes for shipments and employment
deteriorated slightly, edging downward to -8 and -1,
respectively. The third component index, volume of
new orders, however, showed some improvement,
increasing from -22 to -14 in November.

Despite dramatic improvements throughout this year,
supply chain issues appeared to persist for some
firms, as the indexes for vendor lead time and
backlog of orders increased slightly.

The average growth rate of prices paid decreased in
November, while the average growth rate of prices
received increased somewhat. Expectations for prices
paid over the next 12 months decreased slightly since
last month, while expectations for prices received
increased slightly. Both remained at levels much
lower than current price trends.

The wage index decreased notably from 34 to 25 in
November but remained elevated. The local business
conditions index rose from -16 in October to -6 in
November, with considerably fewer firms pessimistic
about conditions over the next six months

/Inflation
Inflation

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
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