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Kansas City Fed Manufacturing Activity declined further in February
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Tenth District manufacturing activity declined further in February, while producers’ expectations for future activity remained slightly positive. Price indexes were mixed, but most remained in negative territory.
The month-over-month composite index was -12 in February, its lowest level since 2009, down from -9 in January and December (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, chemical, metals, and plastics production. Activity was fairly weak across District states, in part due to continued low commodity prices for agriculture and energy. Most month-over-month indexes decreased from the previous month. The production index was unchanged, while the shipments and employment indexes decreased further. The new orders and order backlog indexes rose slightly but still remained negative. The raw materials inventory fell from -2 to -16, and the finished goods inventory index also dropped.
Year-over-year factory indexes were mostly lower than the previous month. The composite year-over-year index decreased from -13 to -20, and the production, shipments, and new orders indexes also moved further into negative territory. The employment index dropped from -15 to -26, its lowest level in nearly six years. The new orders for exports index fell from -4 to -13, while the capital expenditures index remained stable but weak. The raw materials inventory index moved slightly lower, while the finished goods inventory index was unchanged.
Most future factory indexes were stable or slightly higher than last month. The future composite index was basically unchanged at 4, while the future production, shipments, and new orders indexes increased modestly. In contrast, the future employment index eased slightly but still remained positive. The future order backlog index decreased from -2 to -6, and capital expenditures indexes also fell moderately. Both future inventory indexes fell further into negative territory.
Price indexes were mixed in February but most remained negative. The month-over-month finished goods price index inched lower from -15 to -17, while the raw materials price index increased slightly from -14 to -11. The year-over-year finished goods price index edged down from -4 to -10, and the raw materials price index also eased further. The future finished goods price index rose from -6 to -2, and the future raw materials price index rose back into positive territory.
Posted: February 25, 2016 Thursday 11:00 AM