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Thursday, October 25, 2018

Kansas City Fed: Regional Manufacturing Activity "Expanded at a Slower Pace" in October

by Calculated Risk on 10/25/2018 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Expanded at a Slightly Slower Pace

The Federal Reserve Bank of Kansas City released the October 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 continued to expand, but at a slower pace. Expectations for future activity eased slightly, but remained positive.

“While regional factories reported another month of growth, a number of firms engaged in international trade noted negative effects of tariffs on supply chains,” said Wilkerson.
The month-over-month composite index was 8 in October, down from 13 in September and 14 in August. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline in factory growth was driven by slower expansion at durable goods plants, especially for machinery, computer and electronic products, and transportation equipment, while activity at nondurable goods plants increased. Month-over-month indexes were mixed in September, but positive overall. The production and new orders indexes declined slightly, while the order backlog and new orders for exports indexes inched up. The shipments and employment indexes both increased. The materials inventory index declined and the finished goods inventory index was unchanged from last month’s reading.
emphasis added
This is the lowest level for this index since 2016. The regional surveys for October have mostly indicated slower growth in October as compared to September, and these surveys suggest the ISM index will still be solid, but could be close to the lowest level this year.