Haver Analytics
Haver Analytics
| Apr 27 2023

Kansas City Fed Manufacturing Index Plunges in April; Lowest Level Since May ’20

  • Composite Index falls to -10 in April, reflecting drops in production to -21, new orders to -21, and employment to -1.
  • Price indexes increase, w/ both prices paid for raw materials and prices received for finished goods at their seven-month highs.
  • Expectations for future activity remain in positive territory.

The Kansas City Fed manufacturing composite index dropped to -10 in April from 0 in March and February, the April Manufacturing Survey by the Federal Reserve Bank of Kansas City showed, indicating Tenth District manufacturing activity contracted to the lowest level since May 2020. April was well below the reading of 22 from a year ago. The drop was “driven more by nondurable goods plants, especially printing, plastics, paper, and food manufacturing,” the Kansas City Fed reported. The ISM-adjusted index calculated by Haver Analytics fell to 48.6 (NSA) this month from 53.2 in March and 49.6 in February, below the 50 expansion-contraction dividing line for the sixth time in seven months. These ISM-adjusted figures were below the reading of 63.1 in April last year and a record-high level of 68.9 in March last year.

The new orders index dropped to -21 in April from -13 in March, registering the ninth straight negative reading to the lowest level since March 2020 and down from 9 in April 2022. A lessened 23% of respondents (NSA) reported orders gains while an increased 38% reported declines. The production index fell to -21 this month, the sixth contraction in seven months to the lowest level since May 2020, after rising to 3 in March; it was well below 22 in April last year. The employment index was at -1 in April, the lowest reading since June 2020, significantly down from 18 last month and in April last year. Nineteen percent of respondents (NSA) reported increases in the number of employees while 19% also reported decreases. The shipments index fell back to -13 this month from 6 in March; it remained down from 21 in April last year and a record-high 43 in March last year.

The raw materials inventory index slid further to -3 in April, the third consecutive m/m slide to the lowest level since September 2020, from -1 in March; these readings were well below 23 in April 2022. The order backlog index fell back to -26 this month, the ninth successive negative reading and the lowest since May 2020, from -18 in March; it was down from 8 in April last year. The supplier delivery time index increased to -3 in April, the fifth negative reading in six months, after falling to -6 in March; it was significantly below 37 in April last year.

The prices received index for finished products increased to 21 in April, the highest reading since September, after falling to 13 in March. It was well below 50 in April 2022 and a record-high 60 in August 2021. Thirty-one percent of respondents (NSA) reported higher prices received while only 5% reported price declines. The prices paid index for raw materials rose to 32 this month, the fourth straight m/m rise to the highest level since September, from 30 in March; however, it was meaningfully down from a recent-high 77 in April last year.

Expectations for future activity continued to stay positive. The expectations index for six months ahead held at 3 this month. The expectations indexes for employment (13), shipments (9), and raw materials inventories (-17) decreased in April, while expected production (14) and supplier delivery time (2) increased and expected new orders were unchanged at 3. Expectations for future raw materials prices held at 40 in April, but expected finished goods prices declined to a still-high 37 from March’s 41.

The latest survey was conducted for a five-day period from April 19-24, 2023 and included 97 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has ~20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

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