Haver Analytics
Haver Analytics
| May 25 2023

Kansas City Fed Manufacturing Index Rebounds in May

  • Composite Index improves to -1 in May, reflecting rises in production to -2, new orders to -14, and employment to a positive 7.
  • Price indexes fall, w/ prices paid for raw materials having cooled significantly (lowest since July ’20) and prices received for finished goods having eased somewhat.
  • Expectations for future activity remain flat in positive territory.

The Kansas City Fed manufacturing composite index was at -1 in May, noticeably up from -10 in April but marginally down from 0 in March, the May Manufacturing Survey by the Federal Reserve Bank of Kansas City showed, indicating Tenth District manufacturing activity stayed mostly steady this month. The latest reading was well below 21 in May 2022. The May rebound was “driven by both durable and non-durable goods, especially by paper, primary metal, and miscellaneous durable goods manufacturing,” the Kansas City Fed reported. The ISM-adjusted index calculated by Haver Analytics was at 50.9 (NSA) in May, up from a contraction-level 48.6 in April but slightly down from 53.2 in March, indicating an expansion in factory activity for the second time in three months. These ISM-adjusted figures were below 61.7 in May last year and a record-high 68.9 in March last year.

The production index improved to -2 in May, the seventh contraction in eight months at a less severe pace, after dropping to -21 in April, but it was below 15 in May last year. The new orders index increased to -14 this month after falling to -21 in April, registering the 10th straight negative reading and down from 12 in May 2022. A steady 23% of respondents (NSA) reported orders gains while 32% reported declines. The employment index recovered to 7 in May from -1 in April; however, it remained down from 32 in May last year. A higher 25% of respondents (NSA) reported increases in the number of employees while a lessened 17% reported decreases. The shipments index rebounded to -1 this month from -13 in April; nevertheless, it remained down from 13 in May last year and a record-high 43 in March last year.

The raw materials inventory index recovered to 4 in May, the highest reading since January, from -3 in April; these readings were below 18 in May 2022. The order backlog index ticked up to -25 this month, the 10th consecutive negative reading, after falling to -26 in April; these numbers were significantly below 16 in May last year and a record-high 42 in July 2021. The supplier delivery time index increased to 1 in May, the first positive reading since February, from -3 in April; however, it was well below 30 in May last year.

The prices received index for finished products declined to 16 in May after rising to 21 in April. It was well below 43 in May 2022 and a record-high 60 in August 2021. Twenty-two percent of respondents (NSA) reported higher prices received while a steady 5% reported price declines. The prices paid index for raw materials fell to 16 this month, the first m/m fall since December and the lowest level since July 2020, from 32 in April; it was significantly down from 67 in May last year and a recent-high 77 in April last year.

Expectations for future activity stayed mainly flat at a positive level with prices expected to cool further. The expectations index for six months ahead dipped to 2 this month after registering at 3 in April and March. The expectations indexes for production (13) and employment (11) edged down in May. Expected shipments (9), new orders (3), raw materials inventories (-17), and supplier delivery time (2) were unchanged. Expectations for future raw materials prices dropped to 21 in May from 40 in April; expected finished goods prices fell to 17 from April’s 37.

The latest survey was conducted for a five-day period from May 17-22, 2023 and included 92 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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