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Kansas City Fed Manufacturing Activity Eased Slightly
Tenth District manufacturing activity eased slightly in December, but expectations for future months improved somewhat. Price indexes were mixed, with a rise in monthly prices but fewer increases expected in the months ahead.
The month-over-month composite index was -4 in December, down from 4 in November and 8 in October, and the first negative reading since December 2009. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity slowed in both durable and nondurable goods-producing plants, particularly for food and fabricated metal products. Most other month-over-month indexes also fell somewhat in December. The production and shipments indexes moved into negative territory, and the new orders and order backlog indexes fell further. The employment index dropped to its lowest level since mid-2009, and the new orders for exports index edged down. Both inventory indexes decreased considerably.
Growth in year-over-year factory indexes slowed in December. The composite year-over-year index dropped from 22 to 11, its lowest level in over a year. The production, shipments, and new orders indexes all inched lower, and the employment index decreased for the second straight month. The capital expenditures index fell from 23 to 17, but the new orders for exports index continued to increase. The finished goods inventory index dropped from 23 to 10, and the raw materials inventory index slowed to 0.
Most future factory indexes improved from the previous month, and remained at relatively solid levels. The future composite index inched higher from 12 to 14, while the future production index was unchanged. The future shipments, new orders, and employment indexes all rose moderately, and the new orders for exports index climbed from 4 to 9. The future capital expenditures index remained stable at 17, while the future order backlog index slowed slightly. The future raw materials inventory index increased from 0 to 5, but the future finished goods inventory index edged lower.
Price indexes were somewhat mixed this month, with increases in monthly price growth but some moderation expected in coming months. The month-over-month raw materials price index climbed higher from 12 to 28, and the finished goods price index also edged up slightly. The yearover-year finished goods price index slowed somewhat, and the raw materials price index decreased from 70 to 64. The future raw materials price index eased from 58 to 55, and the future finished goods price index moved lower, indicating slightly fewer firms plan to pass recent cost increases through to customers.
Posted: December 29, 2011 Thursday 11:00 AM