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Kansas City Fed Manufacturing Activity declined sharply in March


Tenth District manufacturing activity declined sharply compared with a month ago, and expectations for future activity fell to levels last seen in early 2009. Month-over-month price indexes decreased moderately, and District firms expected lower prices in the next 6 months.

Factory Activity Declined Sharply in March
The month-over-month composite index was -17 in March, the lowest composite reading since April 2009, and down considerably from 5 in February and -1 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decrease in district manufacturing activity was across both durable and non-durable goods plants. All month-over-month indexes except for supplier delivery time were negative in March, and many indexes dropped to the lowest levels since 2015 or 2009. Year-over-year factory indexes also declined, and the composite index fell from 5 to -12. The future composite index dropped significantly from 16 to -19.

Special Questions
This month contacts were asked special questions about the impact of Coronavirus (COVID-19) and recent market volatility. Approximately 73 percent of factory contacts reported decreased outlooks for business activity and demand for products or services due to the coronavirus outbreak and recent market volatility. More than 43 percent indicated increased/slower delivery times. Over 35 percent of firms either reported lower levels of employment or expected employment levels to decline, and nearly 59 percent reported their outlook for capital expenditures for 2020 had declined or spending plans had been put on hold. Around 60 percent of manufacturers faced delayed payments from customers and 54 percent had concerns about cash availability. In response to coronavirus, all firms reported instituting protective measures at their facilities (e.g. hand sanitizer, etc.), nearly 90 percent of firms reported restricting business travel, and 34 percent indicated they had altered healthcare policies due to the coronavirus outbreak.






Posted: March 26, 2020 Thursday 10:30 AM




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