Global| Jul 27 2017Kansas City Federal Reserve Factory Index Falls
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing sector business activity eased to 10 in July, following an unrevised increase to 11 in June. It remained sharply improved versus the negative [...]
The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing sector business activity eased to 10 in July, following an unrevised increase to 11 in June. It remained sharply improved versus the negative readings of 2015 and 2016. The ISM-Adjusted index held steady at 55.0 (NSA), up from the 2015 and 2016 averages below the break-even point of 50. During the last ten years there has been a 60% correlation between this index and the y/y change in factory sector production.
Movement amongst the index components continued to be mixed. New orders, supplier delivery speeds, material inventories and order backlogs each rose last month. Shipments, production and order backlogs weakened sharply. Employment held steady, but was positive versus the earlier negative readings.
The index of finished goods prices improved modestly after last month's sharp decline. The raw materials prices index rose slightly and was up versus the declines of 2015.
The overall expectations index declined sharply to the lowest level in three months. Expected new orders, shipments, employment, exports and production each fell while supplier delivery times gained. Capital spending held steady.
Expectations for finished goods prices declined sharply to the lowest point since November. Expected raw material prices fell, also to the lowest level since November.
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 and northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.
| Kansas City Federal Reserve Manufacturing Survey (SA) | Jul | Jun | May | Jul '16 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| Conditions Versus One Month Ago (% Balance) | 10 | 11 | 8 | -5 | -2 | -6 | 6 |
| ISM-Adjusted Composite Index (NSA) | 55.0 | 55.0 | 54.6 | 47.6 | 48.5 | 46.8 | 52.7 |
| New Orders Volume | 10 | 4 | 9 | -3 | -1 | -8 | 7 |
| Number of Employees | 15 | 15 | 11 | -5 | -6 | -10 | 5 |
| Production | 4 | 23 | -1 | -13 | 1 | -5 | 7 |
| Prices Received for Finished Product | 5 | -2 | 8 | -10 | -7 | -5 | 5 |
| Expected Conditions in Six Months | 19 | 25 | 30 | 13 | 9 | 4 | 17 |
| New Orders Volume | 25 | 39 | 46 | 28 | 19 | 11 | 26 |
| Number of Employees | 26 | 32 | 24 | 7 | 8 | 6 | 18 |
| Production | 29 | 42 | 50 | 24 | 20 | 11 | 28 |
| Prices Received for Finished Product | 13 | 21 | 23 | 10 | 6 | 9 | 26 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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