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Economy in Brief

Kansas City Fed's Factory Sector Index Continues Moving Downward
by Tom Moeller  April 23, 2015

The Federal Reserve Bank of Kansas City reported that business activity continues to deteriorate. The Composite index of 10th District factory sector activity fell to -7 this month, the lowest level since May 2009. Deterioration in the number of employees figure to its lowest point since April 2009 pulled the total lower. Sharp deterioration in the shipments reading added to the shortfall. The supplier delivery times figure turned sharply negative following improvement through February. The new orders figure improved modestly m/m but remained sharply negative. 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 -10, the lowest level since August 2009. The index of prices paid for raw materials improved slightly m/m but remained sharply negative.

The expectations reading improved to 6 following sharp deterioration last month. Nevertheless, it remained positive, suggesting future improvement in business conditions. Expected new orders recovered most of the declines during the prior two months, but the expected shipments figure deteriorated to 16, the lowest point since July 2013. The expected employment reading also plunged to -2, only the third negative reading since the recession's end. The employee workweek reading also turned negative. Expected capital expenditures improved modestly following March's sharp decline. Expected pricing power for finished products deteriorated to near the five-year low. Expected raw materials prices declined sharply to 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) Apr Mar Feb Apr '14 2014 2013 2012
Conditions Versus One Month Ago (% Balance) -7 -4 1 7 6 0 4
   New Orders Volume -12 -20 -10 9 8 1 0
   Number of Employees -18 -2 -4 3 5 -2 5
   Prices Received for Finished Product -10 -6 -3 3 5 4 5
Expected Conditions in Six Months 6 4 11 20 17 10 12
   New Orders Volume 21 6 15 31 26 18 21
   Number of Employees -2 7 14 21 18 9 13
   Prices Received for Finished Product 8 12 6 30 26 24 24
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