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Economy in Brief

Kansas City Fed Factory Indexes Increase
by Tom Moeller  February 27, 2020

The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing business activity rose to 5 in February following January's improvement to -1. This indicates renewed expansion in factory sector activity. The index of expectations in six months rose to 16 and added to the prior month's gain.

The ISM-Adjusted Index increased to 52.7 (NSA) in February. It was the first reading above the break-even level of 50 following seven straight months below 50.

The current condition components of the survey exhibited mixed performance with new orders, shipments and production increasing. The employment index, however, returned to negative territory. The export measure turned positive after eight straight negative numbers. The employee workweek measure remained negative for the fourth straight month.

On the inflation front, prices received for finished products rose for the first time in three months. Raw materials prices, however, increased at a slower rate.

The index measuring expectations in six months rose with a gain in new orders, recovering declines in the prior two months. The expected employment measure held steady and production dipped. Expected export orders surged to the highest level in six months.

Expected finished product prices rose sharply but remained down y/y. Expected raw materials prices moved up slightly but were down y/y.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The December survey included 93 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico and was conducted in the period from December 11-16, 2019. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.

Kansas City Federal Reserve Manufacturing Survey (SA) Feb Jan Dec Feb'19 2019 2018 2017
Conditions Versus One Month Ago (% Balance)     5 -1 -5 0 0 17 14
ISM-Adjusted Composite Index (NSA) 52.7 48.3 43.4 48.5 50.0 58.9 56.7
   New Orders Volume 8 -2 -13 -11 -3 17 17
   Number of  Employees -4 4 -7 7 -1 17 15
   Production 8 -4 -3 -2 2 19 17
   Prices Received for Finished Product 9 -3 -2 16 7 22 7
Expected Conditions in Six Months 16 14 9 14 12 28 26
   New Orders Volume 21 9 16 16 17 35 35
   Number of Employees 20 20 9 25 15 33 31
   Production 21 23 14 20 19 40 40
   Prices Received for Finished Product 28 20 13 34 26 42 27
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