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Economy in Brief

Kansas City Fed Manufacturing Index Strengthens to Record in March
by Tom Moeller  March 24, 2022

• Component improvement is mostly positive.

• Expected conditions rise.

• Pricing power recoups February decline.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 37 during March after rising to 29 in February. It was a record for the series which dates back to July 2001. The ISM-Adjusted Index (NSA) rose to 68.9 this month, also a record.

The new orders measure rose to 33, the highest level since May of last year. An increased 46% of respondents reported order gains and a greatly lessened 9% reported declines. The shipments reading surged to a record 46, up from a low of five in January. The production measure rose to 46, also a series high. The employment measure declined to 18, its lowest level in three months.

The supplier delivery times and order backlog readings also rose to 55 and 29, respectively. The supplier delivery times index matched the record reached in November.

Inflation pressures intensified this month. The prices received index for finished products increased to 51, the highest level since August. A slightly lessened 51% of respondents reported higher prices received while a marginally lessened three percent reported price declines. The overall reading remained below the record level of 57 in August. The raw materials index rose sharply to 81 but remained below the record of 88 last May.

The expectations reading for six months ahead surged to a record 41 from 38 in February. The orders, production and shipments measures rose but employment fell. Expected pricing power surged to a record.

The latest survey was conducted in the five-day period from March 16-to-21 and included 87 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) Mar Feb Jan Mar'21 2021 2020 2019
Conditions Versus One Month Ago (% Balance)     37 29 24 29 26 0 0
ISM-Adjusted Composite Index (NSA) 68.9 62.0 59.0 65.4 62.7 50.1 50.0
   New Orders Volume 33 32 14 44 23 1 -4
   Number of  Employees 18 26 24 21 24 -4 -1
   Production 46 31 20 28 25 0 2
   Prices Received for Finished Product 51 47 49 37 43 2 7
Expected Conditions in Six Months 41 38 37 37 33 10 12
   New Orders Volume 40 36 30 40 37 12 17
   Number of Employees 46 52 57 44 41 11 15
   Production 61 57 44 50 45 14 18
   Prices Received for Finished Product 75 70 67 51 52 16 26
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