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Kansas City Fed Manufacturing Activity was dipped in July
Tenth District manufacturing activity was largely unchanged in July, while expectations for future activity remained moderately positive. The price index for raw materials increased from both last month and a year ago. Prices received for finished products were largely unchanged.
Factory Activity Decrease in July
The month-over-month composite index was -1 in July, similar to the reading of 0 in June and slightly lower than an index of 4 in May. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The small change in manufacturing activity was mostly driven by a decline at durable production plants, including computers, electronic products, appliances, and miscellaneous manufacturing. Most month-over-month indexes edged lower in July, and the new orders, employment, and finished goods inventory indexes turned negative. However, the volume of shipments was flat after last month’s slowdown, and supplier delivery time increased. Nearly all of the year-over-year factory indexes increased, and the composite index rose from 4 to 11. The future composite index remained moderately positive, inching down from 11 to 9, while expectations for production, new orders, and capital expenditures edged higher.
This month contacts were asked special questions about the availability of workers, wage conditions, and their current level of confidence in their local economy. Nearly 80 percent of manufacturing contacts noted that workers are in short supply, and over 60 percent said they are having to raise wages more than normal to attract or keep at least one type of worker. Skilled workers were mentioned as those in the shortest supply. Contacts who have had to raise wages report a typical salary increase of 5 to 10 percent. 61 percent of contacts said their firm’s uncertainty about the economy has increased recently, citing trade concerns and weaker domestic demand as the causes. Still, nearly 80 percent of respondents reported they were confident in their local economy, and only 4 percent reported no confidence.
Posted: July 25, 2019 Thursday 11:00 AM