Thursday, August 24, 2017

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

by Bill McBride on 8/24/2017 11:00:00 AM

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

The Federal Reserve Bank of Kansas City released the August 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 at a faster pace and expectations remained solid.

“Factories reported acceleration in activity in August to the fastest pace since March,” said Wilkerson.  “Many firms also reported plans to raise finished goods prices in coming months.”
...
The month-over-month composite index was 16 in [August], up from 10 in July and 11 in June.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Factory activity increased solidly at durable goods plants, particularly for electronics, metals, and aircraft products, while nondurable goods activity rose more modestly.  Most month-over-month indexes increased over the previous month.  The production index jumped from 4 to 22, and shipments, new orders, and order backlog indexes rebounded strongly after falling last month.  The employment index has remained basically unchanged for the past three months, while the new orders for exports index edged higher.  The finished goods inventory index fell from 7 to 2, while the raw materials inventory index was unchanged.
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.