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Richmond Fed Fifth District manufacturing composite index chart showing the gauge falling to -2 in September 2026 from +4 in August
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Richmond Fed Manufacturing Falls to -2 After Rate Hike

Federal Reserve Bank of Richmond2 min read6 sources

Why did the Richmond Fed manufacturing index fall in September 2026?

The Richmond Fed manufacturing composite (Fifth District) fell to -2 on Monday after the Fed's first rate hike since 2023, missing the +5 forecast as new orders dropped to -6 and shipments slid to -5.

Key numbers

Composite Index-2-6 pts from +4 in Aug; missed +5 forecast
New Orders-6-9 pts from +3 in Aug
Shipments-5-16 pts from +11 in Aug
Employment+7+9 pts from -2 in Aug — sole bright spot
Fed Funds Rate3.75%–4.00%+25 bps on Sep 16, first hike since 2023
ISM Manufacturing (Aug)54.6-1.0 pt from Jul; eighth straight expansion month

What happened

The Richmond Fed manufacturing composite (Fifth District) fell to -2 on Monday after the Fed's first rate hike since 2023, missing the +5 forecast as new orders dropped to -6 and shipments slid to -5. The survey covers roughly 190 factories in Washington DC, Virginia, the Carolinas, Maryland, and most of West Virginia — a broad mid-Atlantic and Southeast sample. New orders swung 9 points in a single month, from +3 in August to -6, while shipments collapsed 16 points from +11 to -5; only employment bucked the slide, jumping to +7 from -2. Prices paid by manufacturers rose notably even as order volumes fell, a margin squeeze that is hard to pass on to customers when demand is already softening.

Why it matters

The Richmond Fed survey is an early signal for US factory health — when it turns negative, it often means factories are slowing before national numbers catch up. The Fed raised rates to 3.75%–4.00% on September 16; this survey appeared six days later, suggesting higher borrowing costs are already cooling orders. Philly and NY also slowed but stayed positive, and the national ISM Manufacturing report arrives October 1 — that will show whether the contraction is spreading beyond the Fifth District.

Who this affects

Marketbearish
Medium impact
Industrial stocks face headwinds as factory orders contract.
Companybearish
Medium impact
Fifth District factories face falling orders and rising input costs.
Competitorsneutral
Low impact
Philly and NY surveys stay positive but slow sharply.
Industrybearish
Medium impact
Rate hike brings fresh headwinds to the US factory sector.

Richmond Fed vs Philadelphia Fed, NY Empire State, ISM Manufacturing

Richmond FedFifth District-2+4+5Contraction
Philadelphia FedMBOS37.847.430.5Expansion
NY Empire StateEmpire State7.620.614.75Expansion
ISM ManufacturingISM PMI—54.6—Expansion (Aug)

As of 2026-09-22

How we got here

  1. ISM Manufacturing prints 54.6 — eighth straight month of US factory expansion.

  2. NY Empire State falls to 7.6 from 20.6, missing the 14.75 forecast.

  3. Fed raises rates 25 bps to 3.75%–4.00%, first hike since 2023.

  4. Philadelphia Fed eases to 37.8 from 47.4, beats +30.5 forecast, still expanding.

  5. Richmond Fed composite falls to -2 from +4, missing the +5 expectation.

What to watch

  • ISM Manufacturing September — national test of whether factory contraction is widening.2026-10-01
  • Dallas Fed Manufacturing Survey — another regional read on post-hike factory conditions.2026-09-28
  • FOMC September meeting minutes — detail on pace and ceiling of future rate hikes.2026-10-07

Educational content only. Not investment advice.

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