Kansas City Fed Manufacturing Activity Declined Somewhat in September
The latest Kansas City Fed Manufacturing Survey composite index declined somewhat in September and the future outlook fell slightly. The composite index came in at -8, down from 0 in August, while the future outlook decreased to 1 from 2 last month.
Here is an excerpt from the latest report:
Factory Activity Declined Somewhat
Tenth District manufacturing activity declined somewhat in September, and expectations for future activity stayed mostly flat (Chart 1, Tables 1 & 2). District firms’ finished product prices picked up slightly this month even as growth in raw materials prices slowed slightly. However, firms expect raw materials price increases to outpace finished product prices in the next six months.
The month-over-month composite index was -8 in September, down from 0 in August and up slightly from -11 in July (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline from last month was primarily driven by decreases in durable goods, particularly metal manufacturing. Most month-over-month indexes were negative and decreased from previous readings. The production, shipments, and new orders indexes all declined significantly—now at -13, -15, and -14 respectively. Backlogs and inventories also declined, while the number of employees and the average employee workweek remained steady. Factory activity decreased further on a year-over-year basis. The composite index decreased to -12 in September from -9 in August and -4 in July. Growth in capital expenditures increased moderately, despite declines in production, orders, and backlogs. The future composite index ticked down to 1 in September from 2 in August, as firms expectations for production and new orders in six months softened. [More...]
Background on Kansas City Fed Manufacturing Survey
The Kansas City Fed Manufacturing Survey is a monthly survey of ~300 manufacturing plants that provides information on current manufacturing activity and future expectations in the tenth district (Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri). The composite manufacturing index is an average of indexes on production, new orders, employment, delivery time, and raw materials inventory. This is a diffusion index, meaning negative readings indicate contraction while positive ones indicate expansion. The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector for this region of the country and the accumulated results can help trace long-term trends.