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Economy in Brief

U.S. Kansas City Fed’s Factory Index Eases in November
by Kathleen Stephansen, CBE  November 18, 2021

• Factory growth eased in November from a record level reached in October.

• Supplier delivery times reached a new record high, pointing to very slow delivery speeds.

• Prices continue to rise.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index eased to 24 in November, from a record high of 31 reached in October. 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) dropped to 60.3 in November, from 65.3 in October. 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 dropped to -4 in November from 27 in October. The shipments index declined to 2 from 28 in October, the lowest level since November 2020. Supplier delivery times reached a new record high of 57 in November, up from 50 in October, indicating on-going very slow delivery speeds. The production index declined to 17 in November from 25 in October. The order backlog measure declined to 10 from 23 in October, the lowest level since November 2020.

The employment measure declined to 27 in November, from the record level of 34 reached in October. Thirty-five percent of firms reported an increase in the number of jobs, while 11 percent reported a decline. The workweek index dropped to 10 from 15 in October. The high was reached in July at 31.

On the inflation front, the prices received index for finished products rose to 50 in November from 47 in October, though still below the record level of 61 in August. The raw materials index eased to a still very high level of 77 in November from the record of 87 in October.

The expectations reading for 6 months ahead advanced slightly to 35 in November from 34 in October, while expectations for supplier deliveries eased to 44 from 47 in October. Expectations for shipments, orders, employment and production all posted small increases.

The latest survey was conducted was conducted from November 10 to 15 and included 91 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) Nov Oct Sep Nov'20 2020 2019 2018
Conditions Versus One Month Ago (% Balance) 24.0 31.0 22.0 11.0 0.4 0.3 17.4
ISM-Adjusted Composite Index (NSA) 60.3 65.3 61.0 53.9 50.1 50.0 58.9
   New Orders Volume -4.0 27.0 7.0 19.0 1.1 -3.3 17.3
   Number of Employees 27.0 34.0 21.0 1.0 -4.1 -0.5 17.3
   Production 17.0 25.0 10.0 20.0 0.3 2.2 18.5
   Prices Received for Finished Product 50.0 47.0 40.0 7.0 2.2 7.1 22.2
Expected Conditions in Six Months 35.0 34.0 35.0 20.0 10.1 11.8 28.3
   New Orders Volume 38.0 36.0 33.0 24.0 11.9 16.9 34.9
   Number of Employees 41.0 40.0 43.0 17.0 11.0 15.3 32.8
   Production 43.0 41.0 58.0 31.0 13.7 18.6 39.5
   Prices Received for Finished Product 55.0 63.0 58.0 30.0 16.0 26.3 42.0
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