Global| Mar 22 2018Kansas City Federal Reserve Factory Index Holds Steady
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 remained unchanged at 17 during March. The index was up, nevertheless, from -12 in December 2015. The ISM-Adjusted [...]
The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing sector business activity remained unchanged at 17 during March. The index was up, nevertheless, from -12 in December 2015.
The ISM-Adjusted index improved slightly to 59.6 (NSA) from 58.2, up versus 41.5 in December 2015. During the last ten years, there has been a 57% correlation between this index and the q/q change in real GDP.
Movement amongst the index components was mixed. The new orders reading plunged while shipments and production weakened. Also down was the export order figure. Conversely, the supplier delivery time measure surged, indicating sharply slower delivery times. Order backlogs were little changed.
Employment strengthened to a record high. Thirty-three percent of respondents reported increased hiring while eight percent reported a decline in job levels. The employee workweek measure surged to the highest level since March 2011.
The index of finished goods prices slipped from the highest level since August 2008. Thirty-two percent of respondents paid higher prices, while six percent paid less. The raw materials prices index strengthened to the highest point since April 2011.
The overall expectations index declined moderately following its February surge to a record level. (The series dates back to 1981.) Expected orders, shipments and production eased from record heights. Expected export orders also fell m/m but remained near the seven-year high. Expected employment slipped m/m but remained strong versus 2016. The expected workweek dropped sharply.
Expected finished goods prices also eased but remained near the highest level since August 2008. Expected raw materials prices similarly slipped m/m, but remained strong versus the 2015 low.
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) | Mar | Feb | Jan | Mar '17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Conditions Versus One Month Ago (% Balance) | 17 | 17 | 16 | 18 | 14 | -2 | -5 |
| ISM-Adjusted Composite Index (NSA) | 59.6 | 58.2 | 57.3 | 60.8 | 56.7 | 48.5 | 46.8 |
| New Orders Volume | -1 | 16 | 14 | 23 | 17 | -2 | -8 |
| Number of Employees | 26 | 23 | 18 | 13 | 15 | -6 | -10 |
| Production | 20 | 21 | 16 | 33 | 17 | 1 | -5 |
| Prices Received for Finished Product | 24 | 26 | 21 | 8 | 7 | -7 | -5 |
| Expected Conditions in Six Months | 33 | 38 | 29 | 31 | 26 | 9 | 4 |
| New Orders Volume | 42 | 49 | 36 | 41 | 35 | 19 | 11 |
| Number of Employees | 36 | 41 | 33 | 43 | 31 | 8 | 6 |
| Production | 42 | 56 | 37 | 50 | 41 | 20 | 12 |
| Prices Received for Finished Product | 48 | 53 | 44 | 27 | 27 | 7 | 9 |
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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