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Economy in Brief

Kansas City Fed's Factory Index Rebounds in October
by Tom Moeller  October 28, 2021

• Overall growth returns to record level.

• Component strength is widespread.

• Prices continue to firm.

• Expected conditions are little changed.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 31 in October after falling to 22 in September. The record high of 31 was previously reached in April of this year. The series dates back to July 2001.

The ISM-Adjusted Index (NSA) rose to 65.3 in October from 61.0 in September. The series record for this measure was 66.7 in April, well above the break-even level of 50 which separates expansion from contraction.

The new orders index increased to 27 and partially recovered the September decline. The shipments index rebounded to 28 and mostly recovered the prior two months' weakening. Supplier delivery times surged to a record 50, indicating very slow delivery speeds. The production index rose to 25 but remained below the July high of 41. The order backlog measure, however, continued to fall; at 23, it was the lowest level in nine months.

The employment measure rose to a record 34. Forty percent of firms reported an increase in the number of job while five percent reported a decline. The workweek index rebounded to 15 but still was half the July level.

On the inflation front, the prices received index for finished products rose to 47 but remained well below the August record of 61. The raw materials index rose to a record 87.

The expectations reading eased this month to 34 and was unchanged from February. Expectations for supplier deliveries surged but shipments & employment fell.

The latest survey was conducted from October 20-25, 2021 and included 98 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. 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'20 2020 2019 2018
Conditions Versus One Month Ago (% Balance)     31 22 29 13 0 0 17
ISM-Adjusted Composite Index (NSA) 65.3 61.0 63.0 56.2 50.1 50.0 58.9
   New Orders Volume 27 7 34 26 1 -3 17
   Number of  Employees 34 21 28 9 -4 -1 17
   Production 25 10 22 23 0 2 19
   Prices Received for Finished Product 47 40 61 4 2 7 22
Expected Conditions in Six Months 34 35 36 21 10 12 28
   New Orders Volume 36 33 31 24 12 17 35
   Number of Employees 40 43 47 22 11 15 33
   Production 41 58 46 31 14 19 40
   Prices Received for Finished Product 63 58 55 26 16 26 42
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