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Kansas City Fed Manufacturing Activity continued to decline moderately in August
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Tenth District manufacturing activity continued to decline moderately in August, similar to the pace of the previous few months. Producers cited weak oil and gas activity and the stronger dollar as key reasons for the continued decrease in activity. Most price indexes fell from the previous survey, with an actual decline in monthly price levels.
The month-over-month composite index was -9 in August, down from -7 in July and equal to -9 in June (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decrease was mostly attributable to weaker nondurable goods manufacturing, led by a reduction in food, beverage, and plastics production. Durable goods production remained weak but stable, particularly for metals and machinery products. Production indexes fell in nearly all District states. The majority of other month-over-month indexes edged lower. The production index dropped from -5 to -16, and the new orders, shipments and order backlog indexes also declined moderately. On the other hand, the new orders index edged higher from -10 to -4, and the employment index rebounded slightly after falling considerably last month. The raw materials inventory index fell from -7 to -12, and the finished goods inventory index also decreased.
Year-over-year factory indexes were mixed but generally weaker than last month. The composite year-over-year index inched up from -10 to -9, and the employment index also moved higher from -16 to -4. The production index was unchanged at -20, while the shipments, new orders, and order backlog indexes decreased somewhat. The capital expenditures index moderated from 17 to 8, and the new orders for exports index fell further. The raw materials inventory index decreased from -1 to -5, while the finished goods inventory index moved into positive territory.
Most future factory indexes declined slightly in August, but remained above zero. The future composite index edged lower from 3 to 0, and the future production, shipments, and new orders indexes eased slightly but remained positive. The future order backlog index dropped from 3 to -13, its lowest level since March 2009, and the future capital expenditures index fell into negative territory for the first time in five years. Both future inventory indexes declined after some improvement last month.
Most price indexes decreased, particularly versus the previous month. The month-over-month raw materials price index plunged from 8 to -8, and the finished goods price index also declined into negative territory. The year-over-year raw materials price index edged down from 19 to 14, and the finished goods price index also fell. The future raw materials and finished goods price indexes both decreased to their lowest levels in nearly six years.
Posted: August 27, 2015 Thursday 11:00 AM