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Kansas City Fed Manufacturing Activity accelerated moderately in March
Tenth District manufacturing activity accelerated moderately in March, and expectations for future activity also increased. The month-over-month finished goods and raw materials price indexes both declined in March, while price expectations for the next six months edged higher.
Factories Report Accelerated Activity in March The month-over-month composite index was 10 in March, up from 1 in February and 5 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factories expanded production of both durable and nondurable goods, particularly food and beverage products, as well as wood, paper, and printing manufacturing. Most month-over-month indexes increased in March, with production, shipments, new orders, order backlog, new orders for exports, and materials inventories rebounding back into positive territory. Most year-over-year factory indexes grew in March, and the composite index rose from 23 to 27. The future composite index also climbed up from 13 to 22, as future factory activity expectations increased across the board.
Special Questions This month contacts were asked special questions about their expectations for capital spending. Nearly 48 percent of manufacturing contacts indicated they expect spending on new plant and equipment to increase over the next 6 to 12 months relative to actual spending over the past 6 to 12 months. Only 11 percent of firms expect to decrease capital spending. Almost 24 percent of contacts affirmed the recent changes in business and consumer confidence had an effect of increasing their capital spending plans. Of the contacts who marked plans to increase capital spending, more than half noted expectations of high sales growth and high capacity utilization as major drivers behind their spending plans (Chart 3). Additionally, more than 42 percent of contacts with plans to increase capital spending indicated they needed to replace other capital goods.
Posted: March 28, 2019 Thursday 10:00 AM