Research >> Economics
Kansas City Fed Manufacturing Activity Moderated Slightly
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Growth in Tenth District manufacturing activity moderated slightly but remained generally solid overall, with a continued positive outlook for future months. Some producers said strong regional oil and gas activity, increased agricultural-related demand, and some pickup in construction activity has resulted in increased production, while others said high gas prices and lingering uncertainty were a slight drag on growth. Price indexes were mixed, with some increases in materials prices, although slightly fewer firms indicated plans to raise prices in the future. The month-over-month composite index was 9 in March, down from 13 in February but up from 7 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.
Manufacturing growth eased in both durable and nondurable goods-producing plants, with the exception of computer and electronic equipment products. Other month-over-month indexes were mixed in March but remained mostly solid. The production index dropped from 20 to 13, and the order backlog index also fell after rising last month. In contrast, the shipments and new order indexes both increased from 8 to 17, and employment index also edged higher. The raw materials inventory index decreased from 14 to 0, while the finished goods inventory index rose for the second straight month.
Year-over-year factory indexes increased further in March. The composite year-over-year index edged up from 21 to 24, and the production, shipments, and new orders indexes also climbed higher. Both the employment and capital expenditures indexes increased for the second straight month, and the new orders for exports index inched up from 5 to 6. In contrast, the order backlog index decreased moderately from 24 to 20. The finished goods inventory index fell from 20 to 13, but the raw materials inventory index improved slightly.
The majority of future factory indexes were stable or eased somewhat, but generally were higher than in late 2011. The future composite index edged down from 20 to 18, and the future production, shipments, and order backlog indexes also fell slightly. The future new orders and employment indexes were unchanged at solid levels, and the future capital expenditures index moved higher from 18 to 20. The future finished goods inventory index rose marginally, while the future raw materials inventory index dropped into negative territory.
Price indexes were mixed. The month-over-month raw materials price index edged lower from 36 to 33, and the finished goods price index also fell. The year-over-year raw materials price index climbed from 57 to 71, while the finished goods price index was unchanged. The future raw materials price index rose from 54 to 65. However, the future finished goods price index eased slightly, indicating fewer firms plan to pass recent cost increases through to customers.
Posted: March 29, 2012 Thursday 11:00 AM