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Economy in Brief

Kansas City Fed Factory Index Weakens Further
by Tom Moeller  April 23, 2020

• Midwest economic activity is under pressure.

• New orders, employment and prices are falling.

• Expectations improve modestly.

The Federal Reserve Bank of Kansas City reported that its manufacturing business activity index declined to a record low of -30 in April following a collapse to -17 in March. It indicated major recession in the area's factory sector activity. The index of expectations in six months improved to -6 from an eleven year low of -19.

The ISM-Adjusted Index fell to 37.6 (NSA) in April from 43.1 in March. It remained down from the May 2018 high of 64.2.

The current condition components all weakened this month with new orders, shipments and production each falling sharply. The employment index eased further into negative territory, nearly touching its March 2009 low. The export measure fell to a record low. The employee workweek measure fell deeper into negative territory where it's been since November.

On the inflation front, prices received for finished products remained negative. The fall to -14 compares to a high of +27 in August 2018. The raw materials prices index remained depressed.

The index measuring expectations in six months improved m/m, but remained negative at -6. New orders, shipments, production and employment were less negative.

Expected finished product prices turned positive, as did expected raw materials prices.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey includes 93 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico and was conducted mid-month. 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'19 2019 2018 2017
Conditions Versus One Month Ago (% Balance)     -30 -17 5 4 0 17 14
ISM-Adjusted Composite Index (NSA) 37.6 43.1 52.7 53.5 50.0 58.9 56.7
   New Orders Volume -64 -38 8 6 -3 17 17
   Number of  Employees -34 -32 -4 1 -1 17 15
   Production -62 -18 8 9 2 19 17
   Prices Received for Finished Product -14 -6 9 10 7 22 7
Expected Conditions in Six Months -6 -19 16 12 12 28 26
   New Orders Volume -8 -35 21 13 17 35 35
   Number of Employees -10 -19 20 19 15 33 39
   Production -8 -36 21 16 19 40 40
   Prices Received for Finished Product 2 -10 28 34 26 42 27
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