Thursday, March 26, 2015

Kansas City Fed: Regional Manufacturing Activity Declined in March

by Bill McBride on 3/26/2015 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Declined

The Federal Reserve Bank of Kansas City released the March Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined in March, and producers’ expectations moderated somewhat but remained slightly positive.

We saw our first monthly decline in regional factory activity in over a year," said Wilkerson. “Some firms blamed the West Coast port disruptions, while producers of oil and gas-related equipment blamed low oil prices.”

Tenth District manufacturing activity declined in March, and producers’ expectations moderated somewhat but remained slightly positive. Most price indexes continued to decrease, with several reaching their lowest level since 2009. In a special question about the West Coast port disruptions, 32 percent of firms said it had affected them negatively.

The month-over-month composite index was -4 in March, down from 1 in February and 3 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to declines in plastics, food, and chemical production and continued weakness in metals and machinery. Looking across District states, the largest decline was in Oklahoma, with moderate slowdowns in Kansas and Nebraska. ... the employment and new orders for exports indexes inched higher but remained negative.
emphasis added
Some of this decline was due to lower oil prices (Oklahoma was especially weak), however overall, lower oil prices will a positive for the economy.  Also some of this decline was related to the West Coast port labor issues that are now resolved.

This was another weak regional manufacturing report (the Richmond Fed survey released earlier this week also showed contraction in March).  The Dallas Fed survey for March will be released this coming Monday and will probably show contraction too.