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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:

• Activity in the service sector improved, according to the latest survey by the Federal Reserve Bank of Richmond. The decline in retail activity slowed in January and business expanded at non-retail services establishments. In addition, both retail and non-retail firms had a better business outlook for the next six months than they held last month.
• Service sector labor markets were mixed, with retail employment and wages remaining weak, though improved from a month ago, while employment and average wages picked up at services firms.
• Price growth in the broad service sector picked up slightly in January, while remaining well-contained. Looking ahead six months, survey respondents expected overall price growth to remain moderate.

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.