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Kansas City Fed Manufacturing Activity continued to decline modestly in November
Tenth District manufacturing activity continued to decline modestly in November, however expectations for future activity rebounded moderately (Chart 1). The month-over-month price indexes for raw materials and finished products both increased and District firms expected prices to increase over the next 6 months.
Factory Activity Continued to Decline Modestly in November The month-over-month composite index was -3 in November, equal to -3 in October, and similar to -2 in September (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 primary metal, fabricated metal products, machinery, and computer and electronic products manufacturing. Most month-over-month indexes were negative in November. The overall production index turned negative and the materials inventory index declined further. However, the shipments and supplier delivery time indexes expanded somewhat. Year-over-year factory indexes increased slightly in November, and the composite index rose from -1 to 6. The future composite index also grew, increasing from 2 to 15, the highest reading since March 2019.
This month contacts were asked special questions about employment plans and changes in wages and salaries to attract or retain employees. While over 48 percent of District manufacturing contacts expected their firms to leave employment unchanged over the next 12 months, nearly 40 percent expected their firms to increase employment levels (Chart 2). Almost 40 percent of contacts indicated they were increasing wages and/or salaries for most job categories by more than in previous years to attract new hires, and 37 percent of contacts indicated they were increasing wages and salaries for most job categories in order to retain existing employees (Chart 3). Another 41 percent and 33 percent of firms reported increased wages and salaries for selected job categories by more than in the past few years in order to attract new hires or retain existing employees, respectively.
Posted: November 22, 2019 Friday 11:00 AM