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Economy in Brief

Kansas City Fed's Factory Sector Index Moves Sharply Lower, Helped by Port Closings
by Tom Moeller  March 26, 2015

The Federal Reserve Bank of Kansas City reported that business activity moderated significantly this month. The Fed indicated that answers to a special question cited West Coast port disruptions as contributing significantly to the weakening. The Composite index of 10th District factory sector activity fell to -4 this month, the lowest level since June 2013. A negative new orders figure of -20 accounted for much of the deterioration as it plunged to the lowest level since February 2013. The shipments index hit zero, down from 15 one year ago. The employment reading improved slightly to -2 but remained near the recent lows. The composite index is an average of the production, new orders, employment, supplier delivery time and materials inventory indexes. The prices received index deteriorated m/m to -6, the lowest level since June 2010. The index of prices paid for raw materials collapsed to -12, the lowest point since May 2009.

The expectations reading deteriorated significantly to 4, the lowest level since April 2013; yet it remained positive, suggesting future improvement in business conditions. Expected new orders plunged to a recovery low of 6 while the expected shipments figure fell moderately to 20, the lowest point since October 2013. The expected employment reading also plunged to its weakest reading since October 2013. The employee workweek reading also fell to its lowest since October. Expected capital expenditures extended recent declines as they fell to the lowest point since August 2010. Expected pricing power for finished products notched up m/m but remained near five-year lows. Expected raw materials prices slipped to nearly the lowest level of the economic recovery.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey included 94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.

Kansas City Federal Reserve Manufacturing Survey (SA) Mar Feb Jan Mar '14 2014 2013 2012
Conditions Versus One Month Ago (% Balance) -4 1 3 10 6 0 4
   New Orders Volume -20 -10 -8 12 8 1 0
   Number of Employees -2 -4 0 4 5 -2 5
   Prices Received for Finished Product -6 -3 -3 10 5 4 5
Expected Conditions in Six Months 4 11 19 11 17 10 12
   New Orders Volume 6 15 24 28 26 18 21
   Number of Employees 7 14 2 29 18 9 13
   Prices Received for Finished Product 12 6 27 23 26 24 24
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