Global| Aug 23 2018Kansas City Federal Reserve Factory Index Weakens Further
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 declined to 14 in August, the lowest level since December. It remained down from the high of 29 three months ago. The [...]
The Federal Reserve Bank of Kansas City reported that its index of regional manufacturing sector business activity declined to 14 in August, the lowest level since December. It remained down from the high of 29 three months ago.
The ISM-Adjusted index fell to 57.0 (NSA) this month from 60.7 in July and remained down from its April high of 64.2. 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 mostly negative. The new orders, shipments, production and supplier delivery times fell, indicating the quickest product delivery speeds since April. The export orders series turned negative. Order backlogs ticked higher, but remained low.
The employment reading fell sharply and reversed a year's worth of strength. A lessened twenty-six percent (NSA) of respondents reported increased hiring while a higher 14 percent reported a decline in job levels. The employee workweek index declined sharply to the lowest level since January.
The index of finished goods prices held steady, remaining near its 2008 high. Twenty-nine percent of respondents paid higher prices, while four percent paid less. The raw materials prices index fell to the lowest level since January.
The overall expectations index declined m/m but generally has moved sideways all year. Expected orders, production and employment declined along with most other series. Expected export orders improved m/m, but remained down sharply from a January high.
Expected finished goods prices sank m/m but remained up sharply from 2016. The expected raw materials price figure also cratered m/m to its lowest level in a year.
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) | Aug | Jul | Jun | Aug '17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Conditions Versus One Month Ago (% Balance) | 14 | 23 | 28 | 16 | 14 | -2 | -5 |
| ISM-Adjusted Composite Index (NSA) | 57.0 | 60.7 | 64.0 | 57.9 | 56.7 | 48.5 | 46.8 |
| New Orders Volume | 9 | 21 | 27 | 24 | 17 | -1 | -7 |
| Number of Employees | 14 | 26 | 24 | 14 | 15 | -6 | -10 |
| Production | 10 | 22 | 38 | 22 | 17 | 1 | -5 |
| Prices Received for Finished Product | 27 | 27 | 22 | 8 | 7 | -7 | -5 |
| Expected Conditions in Six Months | 29 | 34 | 36 | 24 | 26 | 9 | 4 |
| New Orders Volume | 36 | 37 | 42 | 39 | 35 | 19 | 11 |
| Number of Employees | 33 | 42 | 37 | 27 | 31 | 8 | 6 |
| Production | 44 | 49 | 53 | 39 | 41 | 20 | 12 |
| Prices Received for Finished Product | 28 | 43 | 40 | 30 | 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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