Kansas City Fed Manufacturing Index Remains Flat in March
Summary
- Composite Index stays at 0 in March, led by a drop in new orders to -13.
- Employment rises to 18, its highest level since May ’22; production rebounds to 3 after being in negative territory for five straight months.
- Price indexes show mixed results, with a rise to a six-month high in prices paid for raw materials but a slight decline in prices received for finished goods.
- Expectations for future activity improve slightly.
The Kansas City Fed manufacturing composite index was at 0 in March and February and at -1 in January, the March Manufacturing Survey by the Federal Reserve Bank of Kansas City showed, indicating Tenth District manufacturing activity remained essentially flat for the third consecutive month. The March reading was well below a record-high 32 last March. “Nondurable goods plants reported decreased activity in March, especially printing, plastics, and chemical manufacturing, while food manufacturing increased,” the Kansas City Fed reported. The ISM-adjusted index calculated by Haver Analytics rose to 53.2 (NSA) this month from 49.6 in February and 49.7 in January, above the 50 expansion-contraction dividing line for the first time since September and at the highest level since July. These ISM-adjusted readings were below a record-high 68.9 last March.
The new orders index fell back to -13 in March from -6 in February, registering the eighth successive negative reading and down from 22 last March. An increased 32% of respondents (NSA) reported orders gains while 30% reported declines. In contrast, the production index recovered to 3 this month from -9 in February (at negative levels from October to February), but it was significantly down from 42 last March. The employment index rose to 18 in March from 11 in February; it was the highest reading since May and the same level as last March. Twenty-eight percent of respondents (NSA) reported increases in the number of employees while a lessened 12% reported decreases. The shipments index rebounded to 6 this month, the highest reading since July, from -13 in February; nevertheless, remaining down from a record-high 43 last March.
The raw materials inventory index declined to -1 in March, a three-month low, from 1 in February; these readings were well below 29 last March. The order backlog index rebounded to -18 this month, the eighth straight negative reading, from -22 in February, but it was down from 20 last March. The supplier delivery time index fell to -6 in March, the fourth negative reading in five months, after increasing to 2 in February; it was significantly below 50 last March.
The prices received index for finished products fell to 13 in March, the lowest reading since December 2020, after rising to 17 in February. It was well below 48 last March and a record-high 60 in August 2021. Twenty-two percent of respondents (NSA) reported higher prices received while a steady 10% reported price declines. By contrast, the prices paid index for raw materials rose to 30 this month, the highest level since September, from 26 in February; however, it was meaningfully down from a recent-high 77 last April and 75 last March.
Expectations for future activity increased slightly in March. The expectations index for six months ahead rose to 3 this month after falling to 1 in February. The expectations indexes for employment (15), shipments (11), new orders (3), and raw materials inventories (-7) increased in March, while expected production and supplier delivery time were unchanged at 13 and -11, respectively. Expectations for future raw materials prices declined to 40 in March after jumping to 42 in February, but expected finished goods prices increased further this month to 41, the highest level since October, from 40 in February.
The latest survey was conducted for a five-day period from March 15-20, 2023 and included 95 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
AuthorMore in Author Profile »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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