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Thursday, June 27, 2013

Kansas City Fed: Regional Manufacturing contracted in June

by Calculated Risk on 6/27/2013 12:29:00 PM

From the Kansas City Fed: Tenth District Manufacturing Survey Fell Modestly

The Federal Reserve Bank of Kansas City released the June 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 modestly, although producers’ expectations for future activity continued to increase.

“We were a bit discouraged to see factory activity decline in June after it expanded slightly in May,” said Wilkerson. “But quite a few contacts lost production or had shipments delayed due to regional storms and flooding, so the downturn appears like it may be temporary.”

The month-over-month composite index was -5 in June, down from 2 in May but equal to -5 in April and March ... Other month-over-month indexes showed mixed results. The production index dropped from 5 to -17, its lowest level since March 2009, and the shipments and new orders indexes also fell markedly. The order backlog and employment indexes increased somewhat but still remain slightly below zero.
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

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

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

All of the regional surveys - except Kansas City - showed expansion in June, and the Kansas City region was impact by flooding.  The ISM index for June will be released Monday, July 1st, and these surveys suggest a reading above 50 (expansion).