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Economy in Brief

Kansas City Federal Reserve Factory Sector Retraces Earlier Improvement
by Tom Moeller  December 18, 2015

The Federal Reserve Bank of Kansas City reported that manufacturing sector business activity in the region deteriorated sharply during December, and completely reversed the improvement during the prior three months. The Composite Index of 10th District factory sector activity fell to -9, the weakest figure since August, although the quarterly measures continued strengthening after a Q2 low. Deterioration in the monthly readings was broad-based, notably for new orders and employment. The shipments and inventories figures also deteriorated markedly this month, as did inventories. New exports weakened m/m and pricing power remained negative to roughly the same degree throughout the year.

The Composite Index reflecting 6-month expectations remained sharply improved since its June low. Strengthening was notable for shipments and new orders. The employment measure rose, but to a lesser extent. Expected production, capital expenditures and exports also gained but expectations for finished goods prices remained depressed.

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 and 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) Dec Nov Oct Dec '14 2015 2014 2013
Conditions Versus One Month Ago (% Balance) -9 1 -1 8 -5 6 0
   New Orders Volume -5 5 7 14 -7 8 1
   Number of Employees -17 -8 -3 8 -10 5 -2
   Prices Received for Finished Product -7 -9 -3 1 -5 5 4
Expected Conditions in Six Months 7 8 -1 19 4 17 10
   New Orders Volume 16 18 7 23 11 26 18
   Number of Employees 7 13 6 30 6 18 9
   Prices Received for Finished Product -1 2 8 28 9 26 24
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