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Kansas City Fed Manufacturing Activity declined moderately in December
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Tenth District manufacturing activity declined moderately in December, reversing gains from the last several months, while producers’ expectations for future activity remained solid. Most price indexes continued to ease further.
The month-over-month composite index was -9 in December, down from 1 in November and -1 in October (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 decline came from both durable and nondurable goods factories, particularly for food and beverage, computer and electronic equipment, and machinery production. The weakest activity continues to be in energy-concentrated states. The majority of other month-over-month indexes also decreased. The production index fell from 3 to -8, and the shipments, new orders, and employment indexes dropped modestly. In contrast, the order backlog index improved somewhat from -17 to -2. The raw materials inventory fell from 3 to -16, and the finished goods inventory index also moved further into negative territory.
Most year-over-year factory indexes declined in December after improving slightly last month. The composite year-over-year index fell from -5 to -15, a six-year low, and the production, shipments, new orders, and order backlog indexes also decreased moderately. The employment index dropped from -8 to -14, and the capital expenditures index posted its lowest level since August 2010. Both inventory indexes decreased sharply from the previous month.
Future factory indexes were mixed, but remained at generally solid levels. The future composite index was basically unchanged at 7, while the future production, shipments, and new orders for exports indexes increased modestly. The future order backlog index moved into positive territory for the first time in four months, and the future capital expenditures index inched higher from 11 to 13. In contrast, the future new orders index eased from 18 to 16, and the future employment index also fell slightly. The future raw materials inventory index improved from -9 to -6, while the future finished goods inventory index moved further into negative territory.
Most price indexes decreased further in December. The month-over-month raw materials price index dropped from -7 to -14, while the finished goods price index edged up slightly but remained in negative territory. The year-over-year finished goods price index moved lower from 6 to 1, and the raw materials price index also decreased. The future finished goods price index eased from 2 to -1, and the future raw materials price index also fell slightly.
Posted: December 18, 2015 Friday 11:00 AM