Research >> Economics
Kansas City Fed Manufacturing Activity Accelerated Rapidly
|
Growth in Tenth District manufacturing activity accelerated rapidly in March, posting a record high for the second straight month. Expectations moderated slightly from last month, but still remained solid. Price indexes for raw materials reached historically high levels, and more firms indicated plans to pass cost increases on to customers.
The month-over-month composite index was 27 in March, up from 19 in February and 7 in January. This reading set a new all time survey high. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in factory activity increased at both durable and non-durable goods producing plants. Most other month-over-month indicators also improved markedly in March. The production index jumped to 39, its highest level in survey history, and the shipments and order backlog indexes also increased to historically high levels. The employment index inched higher from 23 to 25, also a new survey record. The new orders for exports index eased slightly but still remained solid. Both inventory indexes rose after falling last month.
Growth in most year-over-year factory indexes increased from the previous survey. The composite year-over-year index moved higher from 21 to 30, and the shipments, order backlog, and employment indexes also increased. The capital expenditures index edged up for the second straight month, while the new orders index remained unchanged. The new orders for exports index eased from 22 to 12 after matching an all time survey high last month. Both inventory indexes increased considerably.
Future factory indexes eased somewhat after last month’s jump in activity but remained solid. The future composite index edged down from 30 to 23, and the future production, shipments, new orders, and order backlog indexes also decreased. The future employment index eased from 27 to 19, and the future new orders for exports index also fell. In contrast, the future capital expenditures inched higher from 23 to 24, reaching its highest level since early 2007. The future finished goods inventory index increased from 5 to 11, while the future raw materials inventory index was relatively unchanged.
Price indexes increased further with some indexes reaching record highs. The month-over-month raw materials price index rose to an all-time survey high of 72, and the finished goods price index edged higher. The finished goods price index jumped from 30 to 48, and the year-over-year raw materials price index also increased. The future raw materials price index posted a record high, and the future finished goods price index moved higher to 40, indicating a considerable number of firms plan to pass recent cost increases through to customers.
Posted: March 31, 2011 Thursday 11:00 AM