Recent Updates

  • US: Philadelphia Fed Mfg Business Outlook Survey (Nov)
  • Canada: Employment Insurance (Sep)
  • Canada Regional: Employment Insurance by Province (Sep)
  • Slovakia: Central Government Debt (Q3)
  • Spain Regional: Spain: MVIV House Price Index (Q3)
  • more updates...

Economy in Brief

Kansas City Federal Reserve Factory Index Drifts Lower; Expectations Weaken
by Tom Moeller  October 25, 2019

For the fourth consecutive month, the Federal Reserve Bank of Kansas City reported that its index of regional manufacturing business activity remained below zero. In October, the index eased to -3 from -2 in September. These negative figures suggest declining business activity overall and remain below the high of 26 reached in May 2018.

The ISM-Adjusted index also deteriorated to 48.5 (NSA) this month and reversed part of its September improvement. It was lower than the break-even level of 50 for the fourth consecutive month and remained below the high of 64.2 reached in May 2018. Since 2008, there has been a 56% correlation between this index and the q/q change in real GDP.

Components of the factory survey were mixed m/m. The new orders, shipments and materials inventory readings deteriorated further. The supplier delivery time series improved modestly, but continued to indicate rapid delivery speeds. The production measure deteriorated slightly after rising to the highest level since May. The export orders measure remained negative.

The employment reading rose slightly to a level below zero for the fourth straight month, indicating a net decline in job levels. Eighteen percent (NSA) of respondents reported increased hiring while 22% reported a decline in job levels. The employee workweek index declined after strengthening in June.

The index of finished goods prices improved slightly but remained well below the highs reached early last year. Seventeen percent (NSA) of respondents paid higher prices versus 26% twelve months earlier. Eleven percent paid less versus four percent one year ago. The raw materials prices index was below zero for a third straight month and down sharply y/y.

The overall expectations index declined sharply and was well below the February 2018 high. Expected orders, shipments, employment and production deteriorated. The expected capital expenditure figure fell sharply to the lowest point in over three years. The expected export measure remained low.

The expected finished goods price index improved slightly m/m but was well below the high reached in February 2018. The expected raw materials price figure weakened significantly.

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) Oct Sep Aug Oct '18 2018 2017 2016
Conditions Versus One Month Ago (% Balance)     -3 -2 -6 10 18 14 -2
ISM-Adjusted Composite Index (NSA) 48.5 49.4 45.8 55.7 58.9 56.7 48.5
   New Orders Volume -13 -3 -16 9 17 17 -2
   Number of  Employees -6 -13 -7 10 17 15 -6
   Production 8 11 -2 8 18 17 0
   Prices Received for Finished Product 4 1 -3 20 22 7 -7
Expected Conditions in Six Months 2 5 11 21 28 26 9
   New Orders Volume 11 13 11 35 35 35 19
   Number of Employees 4 13 7 16 33 31 8
   Production 2 5 23 37 40 40 20
   Prices Received for Finished Product 16 14 20 39 42 27 7
close
large image