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Kansas City Fed Manufacturing Activity grew at a modest pace in Oct
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Tenth District manufacturing activity grew at a modest pace in October, and producers’ optimism for future activity remained solid. Firms continued to note difficulties in attracting and retaining certain key workers, particularly machinists and welders. Most price indexes were down slightly from the previous month.
The month-over-month composite index was 4 in October, down from 6 in September but slightly higher than 3 in August. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Producers of metal products and computer and electronic equipment reported the strongest growth, while contacts at food and machinery plants reported further declines in activity. Most other month-over-month indexes were also lower than last month. The production index fell from 12 to 3, and the shipments, new orders, and employment indexes also moved lower. The new orders for exports index decreased from -1 to -9, and the order backlog index posted its lowest level in over a year. The raw materials inventory index increased from 0 to 4, while the finished goods inventory index fell into negative territory.
Most year-over-year factory indexes moved slightly higher. The composite year-over-year index rose from 15 to 17, and the production, shipments, and new orders indexes also increased. The employment index edged up from 12 to 16, and the capital expenditures index reached a two-year high. In contrast, the order backlog index decreased from 12 to 6, and the new orders for exports index fell into negative territory. Both inventory indexes moved lower but remained positive.
Future factory indexes were mostly stable at solid levels. The future composite index was unchanged at 17, while the future production, shipments, and order backlog indexes eased somewhat. The future new orders index was unchanged at 26, while the future employment index rose from 13 to 16. The future capital expenditures index moved slightly higher from 20 to 21, and the future new orders for exports index rebounded from last month’s decline. Both future inventories indexes increased after falling last month.
Most price indexes were down slightly from the previous month. The month-over-month raw materials price index edged down from 20 to 17, and the finished goods price index also moderated somewhat. The year-over-year raw materials price index inched lower from 45 to 44, while the finished goods price index was unchanged. The future raw materials price index eased from 39 to 38, and the future finished goods price index also decreased, indicating fewer firms plan to pass recent cost increases through to customers.
Posted: October 23, 2014 Thursday 11:00 AM