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Kansas City Fed Manufacturing Activity declined again in July
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Tenth District manufacturing activity declined again in July, but less so than in previous months. Producers’ remained slightly optimistic about future activity, although the majority of contacts indicated difficulties finding qualified labor. Most price indexes indicated continued rising prices, but the rate of increase slowed a bit for raw materials.
The month-over-month composite index was -7 in July, up from -9 in June and -13 in May (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The slight improvement was mostly attributable to a rebound in nondurable goods manufacturing, led by an increase in food, beverage, and paper production. However, durable goods production fell further, particularly for metals, computer, and electronic products. Production indexes improved in nearly all District states, but activity was still negative in all states but Colorado. The majority of other month-over-month indexes posted mixed results. The production index jumped from -21 to -5, and the shipments and order backlog indexes also moved higher. On the other hand, the new orders index eased from -3 to -6, and the employment index dropped to its lowest level since April 2009, with many firms noting difficulties finding qualified workers. The raw materials inventory index fell from -10 to -7, while the finished goods inventory index was unchanged.
Year-over-year factory indexes were mixed. The composite year-over-year index inched eased somewhat from -9 to -10, and the employment index fell to a five-year low. The production index improved slightly from -21 to -20, and the shipments, new orders, and order backlog indexes also inched higher. The capital expenditures index increased markedly from 5 to 17. The raw materials inventory index rose from -4 to -1, while the finished goods inventory index fell into negative territory.
Most future factory indexes remained modestly positive in July. The future composite index was unchanged at 3, while the future production, shipments, and order backlog indexes eased slightly but remained above zero. The future new orders and employment indexes increased slightly, while the future capital expenditures index dropped from 13 to 1. Both future inventory indexes increased modestly but remained negative.
Most price indexes were flat to down, but still well above zero. The month-over-month raw materials price index eased from 13 to 8, while the finished goods price index moved into positive territory for the first time since last December. The year-over-year raw materials price index fell from 27 to 19, while the finished goods price index was unchanged. The future raw materials price index decreased from 33 to 23, while the future finished goods price index remained stable.
Posted: July 23, 2015 Thursday 11:00 AM