Research >> Economics
Kansas City Fed Manufacturing Activity continued to grow modestly in November
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Tenth District manufacturing activity continued to grow modestly in November. Manufacturing activity remained below year ago levels, but expectations for future activity remained solid. Prices paid for raw materials and finished goods continued to expand compared to a month ago and a year ago. District firms expected prices for both raw materials and finished goods to increase further in the next six months.
Factory Activity Continued to Grow Modestly
The month-over-month composite index was 11 in November, slightly lower than 13 in October but the same as 11 in September. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity at non-durable and durable goods factories expanded at a similar pace. Production of primary metals and nonmetallic mineral products slowed, while transportation equipment manufacturing increased. Month-over-month indexes remained mostly positive, indicating continued expansion. Production, shipments, new orders, and employment rose at a slower pace. The new orders for exports index decreased while the index for supplier delivery expanded. Year-over-year factory indexes remained mostly negative in November, and the composite index was unchanged at -12. The future composite index remained solid at 21 in November, similar to expectations in October.
Special Questions
This month contacts were asked special questions about hiring restraints and how developments surrounding COVID-19 have affected online business strategies. Over half of firms reported an inability to find skilled workers and the lack of qualified applicants is one of the biggest factors restraining hiring plans. A significant share of firms also had restrained hiring plans due to low expectations for sales growth and uncertainty about the pandemic or Coronavirus-related regulations. Concerning online business, 38% of manufacturers indicated that developments surrounding COVID-19 affected their company's online business strategy. Around 21% of firms expanded their existing online business, 7% implemented an online business segment, and 8% of firms have plans to create an online segment in the future. A third of manufacturers made no changes to their existing online business, while another 31% do not have an online business and have no plans to implement one in the future.
Posted: November 19, 2020 Thursday 11:00 AM