Research >> Economics
Kansas City Fed Manufacturing Activity Continued to Grow
|
Tenth District manufacturing activity rebounded moderately in January, and factories’ production expectations continued to climb higher. Many contacts blamed winter weather issues for the slowdown in December, citing lost production days, delays in supply shipments, and lower customer demand. Production also declined slightly in January, for similar reasons, but was expected to rise strongly heading forward. Price indexes rose in January, particularly expectations for raw materials prices.
The month-over-month composite index was 5 in January, up from -3 December and similar to the reading of 6 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity increased at both durable and nondurable goods-producing plants, with the exception of food, beverage, and aerospace products. Most other month-over-month indexes also rose in January. The production index edged higher from -13 to -8, and the shipments, new orders, and order backlog indexes all rebounded from last month. The employment index jumped from 0 to 11–its highest level since October 2011–and the new orders for exports index moved into positive territory for the first time in five months. The raw materials inventory index increased from -1 to 6, and the finished goods inventory index also inched higher.
Most year-over-year factory indexes increased after falling last month. The composite year-over-year index rose from 3 to 8, and the production, shipments, and new orders indexes also improved moderately. The capital spending index posted its highest level since March, and the new orders for exports index edged up from -3 to 3. The employment and order backlog indexes were relatively unchanged. Both inventory indexes increased for the second straight month.
Future factory indexes rose solidly in January with many reaching multi-year highs in part due to firms anticipating strong bounce-back from weather-related delays. The future composite index climbed from 15 to 26, and the future production and shipments indexes posted their highest level in nearly ten years. The future order backlog index increased from 24 to 35–a three year high–and the future employment index rose from 8 to 22, its highest level since February 2012. The future capital expenditure index jumped from 12 to 26, a seven-year high. The future raw materials inventory index increased from -1 to 9, and the future finished good inventory index also edged higher.
Price indexes increased somewhat from the previous month. The month-over-month raw materials price index edged up from 15 to 19, and the finished goods price index also rose. The year-over-year raw materials index moved up from 40 to 48, and the finished goods price index also increased. The future raw materials price index jumped from 27 to 47, primarily for users of metals, and the future finished goods price index climbed higher, indicating more firms plan to pass recent cost increases through to customers.
Posted: January 23, 2014 Thursday 11:00 AM