Discussion Paper
Assessing Manufacturing Business Conditions by Firm Size
Abstract: Fifth District manufacturing activity, as measured by the Richmond Fed manufacturing composite index, has been sluggish over the past few years. To better understand these dynamics, we look at firms' reported performance by size. Specifically, we looked at the diffusion indexes for several metrics. Diffusion indexes are often used to understand if economic activity is improving, declining, or is unchanged. For example, with employee headcount, a positive value means that more firms reported increasing headcount, while a negative value indicates that more firms reported decreasing headcount. We find that large manufacturers are more likely to report improved activity compared to small and mid-sized firms. Specifically, large firms were more optimistic about local business conditions, employment, shipments, and new orders, and were more able to restructure supply chains to address changes in trade policy.
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https://www.richmondfed.org/region_communities/regional_data_analysis/regional_matters/2025/assessing_manufacturing_business_conditions
Description: Discussion Paper
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Provider: Federal Reserve Bank of Richmond
Part of Series: Regional Matters
Publication Date: 2025-11-04