Kansas City Fed Manufacturing Activity Strengthens in April

• Growth remains at record level.

• Component movement is mixed.

• Expectations for six months ahead ease.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to a record 31 in April from 26 in March. The headline figure compares to -30 one year ago. The series dates back to July 2001.

The ISM-Adjusted Index (NSA) rose to 66.7 in April from 65.4 in March. It also was a record, remaining well above the level of 50 which separates expansion from contraction.

Movement amongst the individual series remained mixed. To the upside, the shipments index rose to the highest level since June 2018. The order backlog measure surged to a record high. Strengthening also was the employment series to a record 29. The production series also hit a new record. Easing was the supplier delivery time index to 35 after rising to a record 41 in March. It still indicated slow product delivery speeds. The new orders index also eased to 29 from a near-record 37 in March.

On the inflation front, the prices received index for finished products strengthened to a record 41. It compared to the deflationary readings registered earlier last year. The raw materials index also surged to a new record of 78. It remained up from -16 in April of 2020.

The expectations-in-six months composite reading eased to 34 in April, but remained up sharply from -19 in March of last year. The expected supplier delivery index fell sharply, suggesting faster expected deliver speeds, and backlogs also declined slightly. Expected new orders and shipments improved while expected employment surged.

The expectations index for prices received declined moderately m/m to 43 but remained up significantly from 12 months ago. Expectations for raw materials prices also surged to 79 this month and matched the record level.

The figures date back to July 2001. The composite index is an average of the production, new orders, employment, supplier delivery time and raw materials inventory indexes. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey covered plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.