The Kansas City Fed Manufacturing Survey revealed regional activity remained steady in June. The composite index came in at 9 this month, down slightly from 11 in June but still indicating continued expansion.
Here is an excerpt from the latest report:
The month-over-month composite index was 9 in July, down from 11 in June and up from 8 in May (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth slowed in the nondurable manufacturing sector, primarily driven by declines in food manufacturing. Stronger growth in the durable manufacturing sector was driven by electrical equipment manufacturing. All month-over-month indexes were positive except for new orders for exports at -1. The inventories and employee workweek indexes rose from last month. The year-over-year composite index eased from 15 to 14, but all other indexes were positive except for new orders for exports and employment. Expectations for future activity remained expansionary with the composite index at 20, reaching its highest reading since July 2022, as expectations for future production and shipments are elevated.
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.
