Thursday, March 31, 2011

Kansas City Manufacturing Survey at Record High, Chicago PMI Strong in March

by Bill McBride on 3/31/2011 11:00:00 AM

• Note: The Irish bank stress test results will be released at 4:30 PM local time (11:30 AM ET). The Irish Times has a live blog discussing the results.

• From the Kansas City Fed: Survey of Tenth District Manufacturing

Growth in Tenth District manufacturing activity accelerated rapidly in March, posting a record high for the second straight month. Expectations moderated slightly from last month, but still remained solid. Price indexes for raw materials reached historically high levels, and more firms indicated plans to pass cost increases on to customers.

The month-over-month composite index was 27 in March, up from 19 in February and 7 in January. This reading set a new all time survey high. ... The employment index inched higher from 23 to 25, also a new survey record.
This is the last of the regional Fed surveys for January. The regional surveys provide a hint about the ISM manufacturing index, as the following graph shows.

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image in graph gallery.

The New York and Philly Fed surveys are averaged together (dashed green, through March), and averaged five Fed surveys (blue, through March) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through February (right axis).

The regional surveys suggest the ISM manufacturing index will in the 60+ range (strong expansion). The ISM index for March will be released tomorrow, April 1st. The consensus is for a decrease to 61.2 from 61.4 in February.

And from earlier this morning ...

• From the Chicago Business Barometer™ Decelerated: The overall index decreased to 70.6 from 71.2 in February. This was slightly above consensus expectations of 70.0. Note: any number above 50 shows expansion, so this is a strong reading.

"EMPLOYMENT grew to its second-highest level since February 1973." The employment index increased sharply to 65.6 from 59.8. This is the highest level since December 1983.

"NEW ORDERS increased to the highest point since December 1983". The new orders index decreased to 74.5 from 75.9.

Prices were up sharply, but over all this was a strong report.