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Kansas City Fed Manufacturing Activity continued to decline in September
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Tenth District manufacturing activity declined at a similar pace as in previous months, while expectations for future activity dropped considerably. Producers continued to cite weak oil and gas activity along with a strong dollar as key reasons for the sluggish activity. Most price indexes fell from the previous survey.
The month-over-month composite index was -8 in September, largely unchanged from -9 in August and -7 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Both durable and nondurable goods production continued to decline, although some nondurable production such as plastics, chemicals, and food improved somewhat. Durable goods production remained weak, particularly for metals and machinery products. Production indexes continued to fall in nearly all District states. The majority of other month-over-month indexes edged slightly higher but still remained negative. The production index jumped from -16 to 1, and the new orders, shipments and order backlog indexes also improved somewhat but stayed negative. The employment index inched up from -10 to -7, and the new orders for exports index also moved slightly higher. The raw materials inventory index fell from -12 to -20, while the finished goods inventory index increased modestly.
Year-over-year factory indexes were mixed but generally weaker than last month. The composite year-over-year index fell from -9 to -13, and the new orders and employment indexes also declined further. The capital expenditures index dropped from 8 to -3, its lowest level since January 2013. The production and shipments indexes both improved modestly but remained in negative territory. The raw materials inventory index decreased from -5 to -10, and the finished goods inventory index also decreased.
Future factory indexes declined markedly in September. The future composite index dropped from 0 to -12, its lowest reading since 2009, and the future production, shipments, and new orders indexes also posted six-year lows. The future order backlog index fell further from -13 to -20, and the future employment index moved into negative territory for the first time in five months. The future capital expenditures index was largely unchanged at -1, while the future new orders for exports index eased somewhat. Both future inventory indexes declined further.
Price indexes either fell or remained negative in September. The month-over-month finished goods price index edged slightly higher from -10 to -7, while the raw materials price index was basically unchanged. The year-over-year raw materials price index edged down from 14 to 10, and the finished goods price index also fell. The future raw materials and finished goods price indexes both decreased further, to their lowest levels in nearly six years, with the future finished goods index now in negative territory.
Posted: September 24, 2015 Thursday 11:00 AM