Research >> Economics
Kansas City Fed Manufacturing Activity Fell Slightly
Tenth District manufacturing activity fell slightly in December, but producers’ expectations for future activity improved modestly. Some contacts cited poor weather, and continued fiscal and regulatory uncertainty as reasons for the December slowdown. Slightly over half of all respondents noted labor shortages, with nearly one third indicating additional wage pressures. Current price indexes posted few changes, but expectations for future prices continued to rise.
The month-over-month composite index was -3 in December, down from 7 in November and 6 in October. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The production index fell at nearly all types of durable goods plants, while production at nondurable goods plants declined at a slower rate than last month. Most other month-over-month indexes decreased over the last month. The production index plunged from 11 to -17, and the new orders, shipments, and order backlog indexes all dropped considerably. The employment index edged lower from 6 to 2, and the new orders for exports index also eased somewhat. The raw materials inventory index moved into negative territory, while the finished goods inventory index improved slightly.
The majority of year-over-year factory indexes moderated in December. The composite year-over-year index decreased from 9 to 3, and the production, shipments, and order backlog indexes fell below zero. The new orders index dropped from 21 to 6, while the capital expenditures index was unchanged. The employment index edged higher from 4 to 7, and both inventory indexes increased slightly.
Most future factory indexes continued to improve somewhat and were at solid levels. The future composite index rose from 12 to 14, and the future production, shipments, and new orders indexes also increased. The future order backlog index edged up from 7 to 8. The future employment index eased from 20 to 14–still the second highest level posted this year–and the future capital expenditures index fell slightly. The future raw materials inventory index decreased from 2 to 0, and the future finished goods inventory index also edged lower.
Price indexes were mixed. The month-over-month raw materials price index rose from 17 to 21, while the finished goods price index eased somewhat. The year-over-year finished goods price index fell modestly, but the raw materials price index was basically unchanged. The future raw materials price index increased from 31 to 37, and the future finished goods price index moved higher, indicating more firms plan to pass recent cost increases through to customers.
Posted: December 20, 2013 Friday 11:00 AM