Research >> Economics
Kansas City Fed Manufacturing Activity Slowed Further in June 2022
|
Growth in Tenth District manufacturing activity slowed further but remained positive. Expectations for future activity also moderated slightly but were still at solid levels overall (Chart 1, Tables 1 & 2). Raw materials price indexes eased slightly from last month and compared with last year. Finished goods price indexes increased slightly from a month ago but eased slightly compared with year ago levels. Expectations for future prices remained high, but slightly below previous levels.
The month-over-month composite index was 12 in June, down from 23 in May and 25 in April (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The slower pace of factory growth was driven by decreased activity at durable goods plants in June, especially electrical equipment, transportation equipment, and furniture related product manufacturing. Month-over-month indexes eased in June, with some indexes moving into negative territory. Indexes for production, shipments, new orders, and order backlog declined, while inventory indexes increased slightly. Year-over-year factory indexes decreased modestly, with a composite index of 35. The supplier delivery time index eased compared to a year ago, along with the materials inventory and employment indexes. The future composite index was 10 in June, down from 31 in May. Indexes for future production, shipments, new orders, and capital spending continued to moderate but remained positive.
Special Questions
This month contacts were asked special questions on supply chain disruptions/shortages, the ability to pass through costs, and future expectations. In June, firms reported the top three supply chain disruptions affecting their business were delays in shipping, lack of availability, and warehousing and storage. About 60% of firms expected supply chain disruptions and shortages to remain unchanged or worsen in the next 6 months (Chart 2). Over 55% of firms reported their ability to pass through costs has increased slightly or significantly since the beginning of the year (Chart 3). However, 33% of firms expected no change in the next 6 months and 43% expected a slight or significant increase in pass through ability.
2022JUNE_MANUFACTURING_FEDERALRESERVE_KANSASCITY.pdf
Posted: June 23, 2022 Thursday 11:00 AM