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Kansas City Fed Manufacturing Activity posted strong growth in October
Tenth District manufacturing activity posted strong growth, and expectations for future activity improved further. Raw materials price indexes increased modestly, while indexes for selling prices were mixed.
The month-over-month composite index was 23 in October, the highest since March 2011, up from 17 in September and 16 in August (Tables 1 & 2, Chart 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factory activity increased strongly at both durable and non-durable goods plants, particularly for food, plastics, computer and electronic products. Month-over-month indexes were mostly higher. The new orders index increased moderately, and the order backlog index increased to its highest reading since March 2011. The employment and new orders for exports indexes increased slightly. However, the shipments index was unchanged, and the production index eased somewhat but remained high. The finished goods inventory index jumped back into positive territory, and the raw materials inventory index also increased moderately.
Most year-over-year factory indexes eased somewhat in October from high readings in September. The production index fell from 56 to 41, and the shipments and capital expenditures indexes were modestly lower. The order backlog and new orders indexes inched down, and the composite and new orders for exports indexes were mostly unchanged. The employment index stayed flat. The raw materials inventory index increased to 30, its highest reading since May 2007, and the finished goods inventory index rose from 2 to 15.
Future factory activity expectations improved for a second consecutive month. The future new orders and employee workweek indexes increased considerably, and the future order backlog, capital expenditures, employment, and production indexes rose moderately. The future composite index increased from 26 to 32, and shipments and new orders for exports improved modestly. In contrast, the supplier delivery time index fell to its lowest reading since January 2017. The future raw materials inventory index inched higher from 19 to 22, and the future finished goods inventory index increased moderately.
Most price indexes increased further in October. The month-over-month finished goods price index was unchanged, and the raw materials price index inched higher. The year-over-year finished goods price index eased from 38 to 33, and the year-over-year raw materials price index increased to its highest since May 2014. The future finished goods price index rose from 29 to 32, and the future raw materials price index edged up to 43.
Posted: October 26, 2017 Thursday 11:00 AM