Thursday, July 27, 2017

Kansas City Fed: Regional Manufacturing Activity "Expanded Moderately" in July

by Bill McBride on 7/27/2017 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Expanded Moderately

The Federal Reserve Bank of Kansas City released the July 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 expanded moderately with solid expectations for future activity.

“We’ve now seen four months of steady gains following more rapid growth in factory activity earlier this year,” said Wilkerson.  “Firms overall seem confident that moderate growth will continue.”
...
The month-over-month composite index was 10 in July, down slightly from 11 in June but up from 8 in May. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Factory activity increased moderately at non-durable goods plants, particularly for chemicals and plastics, while durable activity moderated somewhat.  Month-over-month indexes were mixed.  The production index tumbled from 23 to 4, and the shipments index fell into negative territory for the first time since August 2016.  Conversely, the employment index remained solid, while the new orders index rose modestly, and the order backlog index also increased but remained negative.
emphasis added
The Kansas City region was hit hard by the sharp decline in oil prices, but activity started expanding last year when oil prices increased. Now growth is moderate with oil prices mostly moving sideways.