Research >> Economics
Kansas City Fed Manufacturing Activity eased slightly in October
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Tenth District manufacturing activity eased slightly in October, and expectations for future activity inched lower but remained slightly positive (Chart 1). The month-over-month price index for raw materials declined at a slower rate, while the price index for finished products expanded slightly. District firms expected prices to increase over the next 6 months.
Factory Activity Eased Slightly in October
The month-over-month composite index was -3 in October, down slightly from -2 in September, but above -6 in August (Table 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline in district manufacturing activity continued to be driven by slower activity at durable goods plants, especially from decreases in nonmetallic mineral products, primary metal, fabricated metal products, machinery, computer and electronic products, and transportation equipment manufacturing. Most month-over-month indexes declined in October, especially for the new orders index. However, the production index remained positive, and the supplier delivery time index inched higher. Year-over-year factory indexes were somewhat mixed in October, but the composite index was again unchanged at -1. The future composite index remained positive, but eased from 5 to 2, the lowest future composite index since March 2016.
Special Questions
This month contacts were asked special questions about capital investment decisions and difficulties hiring employees. Over 43 percent of regional manufacturing contacts indicated that the need to replace existing plant and equipment was the primary driver for capital investment decisions (Chart 2). Nearly 38 percent of contacts reported future demand expectations was the primary driver for investment decisions, and another 13 percent said economic/political uncertainty was the main factor. In regards to filling positions, 48 percent of firms said they had difficulty hiring workers over the past three months because of a lack of qualified applicants (Chart 3). Just over 26 percent of contacts noted they did not have difficulty hiring workers over the past three months.
Posted: October 24, 2019 Thursday 11:00 AM