Thursday, June 27, 2019

Kansas City Fed: "Tenth District Manufacturing Activity Flat"

by Calculated Risk on 6/27/2019 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Flat

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 was flat in June, while expectations for future activity remained solid.

“Regional factory growth was relatively flat,” said Wilkerson. “However, nearly 70 percent of manufacturing contacts reported confidence in the U.S. economy, and a majority have not changed their 2019 plans for employment and capital spending.”
The month-over-month composite index was 0 in June, slightly lower than 4 in May and 5 in April. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The change in manufacturing activity was mostly driven by a decline at durable production plants, especially for computers, electronic products, and transportation equipment. Most month-over-month indexes edged lower in June, with a number of indexes decreasing, including the materials inventory index. However, the new orders index inched higher. Nearly all of the year-over-year factory indexes decreased to their lowest levels since late 2016, and the composite index fell from 23 to 4.
emphasis added
This was the last of the regional Fed surveys for June.

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 (yellow, 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).

The regional surveys were mostly weak in June, and based on these regional surveys, it seems likely the ISM manufacturing index will be lower in June than in May - perhaps close to 50.