Kansas City Fed Manufacturing Activity Declined Again in April

The latest Kansas City Fed Manufacturing Survey composite index declined again in April while future expectations remained flat. The composite index came in at -8, down from -7 in March, while the future outlook inched up to 2.

Here is an excerpt from the latest report:

Factory Activity Fell Again

The month-over-month composite index was -8 in April, down from -7 in March and -4 in February (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity declined somewhat for both durable and nondurable goods, with food, metals, electrical equipment, and paper manufacturing driving the decreases. All month-over-month indexes posted negative readings, except for the price indexes and new order for exports which was flat. Production, volume of shipments, supplier delivery time, and material inventories fell further from last month, while declines in new orders and backlogs moderated. The number of employees and employee workweek indexes were essentially flat at -2 and -3, respectively. The year-over-year index for factory activity decreased further to -12 from -4. Production fell further at -8 and employment declined with a reading of -7. The capital expenditures index reached -6, its lowest level since August 2020. The future composite index ticked up to 2 from 1 in April, with the production index boosting the composite at a reading of 16 and the raw materials inventory index dragging at -15. [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.