Thursday, April 25, 2013

Kansas City Fed: Regional Manufacturing contracted "modestly" in April

by Calculated Risk on 4/25/2013 11:00:00 AM

So far all of the regional manufacturing surveys have indicated April was pretty weak. From the Kansas City Fed: Tenth District Manufacturing Survey Fell Modestly

The Federal Reserve Bank of Kansas City released the April 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 fell by a similar modest amount as last month, and producers' expectations moderated but remained positive overall.

"We saw another small decline in regional factory activity this month," said Wilkerson. "Some firms see signs of a pickup in activity later this year driven by pent up demand and new product offerings, but others have become more pessimistic recently as anticipated demand has failed to materialize."

The month-over-month composite index was -5 in April, equal to -5 in March but up from -10 in February ... The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Durable goods-producing plants reported a smaller decline in activity, but production at nondurable-goods plants fell after increasing last month, particularly for food and plastics products. Most other month-over-month indexes improved somewhat. The production index edged higher from -1 to 1, and the shipments index also increased, with both indexes moving into positive territory for the first time in 8 months. The employment index rebounded from -15 to -3, and the order backlog index also rose. The new orders and new orders for exports indexes were basically unchanged. Both inventory indexes fell further into negative territory after increasing last month.
The last regional survey for April will be released next Monday (Dallas), and the ISM index for April will be released on Wednesday, May 1st. Based on the regional surveys, I expect a fairly weak reading for the ISM index (perhaps at or below 50).