Kansas City Fed Manufacturing Index Strengthens to Record in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Component improvement is mostly positive.
- Expected conditions rise.
- Pricing power recoups February decline.
The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 37 during March after rising to 29 in February. It was a record for the series which dates back to July 2001. The ISM-Adjusted Index (NSA) rose to 68.9 this month, also a record.
The new orders measure rose to 33, the highest level since May of last year. An increased 46% of respondents reported order gains and a greatly lessened 9% reported declines. The shipments reading surged to a record 46, up from a low of five in January. The production measure rose to 46, also a series high. The employment measure declined to 18, its lowest level in three months.
The supplier delivery times and order backlog readings also rose to 55 and 29, respectively. The supplier delivery times index matched the record reached in November.
Inflation pressures intensified this month. The prices received index for finished products increased to 51, the highest level since August. A slightly lessened 51% of respondents reported higher prices received while a marginally lessened three percent reported price declines. The overall reading remained below the record level of 57 in August. The raw materials index rose sharply to 81 but remained below the record of 88 last May.
The expectations reading for six months ahead surged to a record 41 from 38 in February. The orders, production and shipments measures rose but employment fell. Expected pricing power surged to a record.
The latest survey was conducted in the five-day period from March 16-to-21 and included 87 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. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.
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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