Kansas City Fed's Factory Sector Index Deteriorates To 2009 Low

The Federal Reserve Bank of Kansas City reported that business activity diminished during May. The Composite index of 10th District factory sector activity fell to -13, the lowest level since April 2009. The Fed indicated that exporters and energy-related producers realized fewer orders. The negative new orders figure of -19 roughly matched the lowest level since February 2013. The shipments index fell to -9, down from 15 in March 2014. The employment reading held fairly steady at -17, the lowest figure since 2009. The composite index is an average of the production, new orders, employment, supplier delivery time and materials inventory indexes. The prices received index improved m/m to -4, but remained near the expansion low. The index of prices paid for raw materials stabilized at -6 but was still near the lowest point since mid-2009.

The expectations reading deteriorated sharply to 0, the lowest level since July 2009. Expected new orders plunged to a recovery low of 2 while the expected shipments figure fell to 12, the lowest point since April 2013. The expected employment reading stabilized following sharp declines during the prior four months. The employee workweek reading, however, collapsed to its lowest since 2009. Expected capital expenditures extended recent declines as they fell to the lowest point since August 2010. Expected pricing power for finished products improved m/m to the best level since January, but remained down sharply from the highs of the economic recovery. Expected raw materials prices also stabilized following declines to the lowest level of the economic recovery.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey included 94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.