Tenth District manufacturing activity expanded at a slower pace in January, but producers’ expectations for future activity remained at solid levels. Most price indexes were lower than last month, especially for finished goods prices.

The month-over-month composite index was 3 in January, down from 8 in December and 6 in November . The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to declines in some types of durable goods production, particularly electronics, machinery, and metal products, some of which is likely due to lower energy activity. Looking across District states, the weakest activity was in energy-dependent Oklahoma. In contrast, nondurable goods producers reported a slight increase in production, especially for food and plastics products. Most other month-over-month indexes were also down compared to last month. The production, shipments, and new orders indexes moved into negative territory for the first time in over a year, and the employment index posted a five-month low. The order backlog index plunged from 5 to -20, and the new orders for exports index decreased from 0 to -7. The finished goods inventory index continued to rise somewhat, and the raw materials inventory index moved up from 7 to 12.

Year-over-year factory indexes were lower than the previous month. The composite year-over-year index edged down from 11 to 9, and the production, new orders, shipments, and order backlog indexes all posted their lowest levels in over a year. The employment index moderated from 18 to 11, and the capital expenditures index eased further. The new orders for exports index fell into negative territory, while both inventory indexes increased slightly.

Future factory indexes continued to remain stable at mostly solid levels. The future composite index was unchanged at 19, while the future production, shipments, and new orders indexes inched higher. In contrast, the future order backlog index dropped from 17 to 3, and the future employment index eased from 30 to 24. The future capital expenditures index moderated from 25 to 16 after increasing last month. The future finished goods inventory index fell from 18 to 7, and the future raw materials inventory index also decreased slightly.

Most price indexes slowed modestly in January. The month-over-month finished goods price index declined from 1 to -3, its lowest level since July 2010, while the raw materials price index was basically unchanged. The year-over-year raw materials price index eased slightly, and the finished goods price index dropped from 34 to 19. The future raw materials price index moderated from 36 to 31, while the future finished goods price index was basically unchanged.