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Economy in Brief

Kansas City Fed Manufacturing Index Increases in February
by Tom Moeller  February 24, 2022

• Component improvement is widespread.

• Expected conditions rise.

• Pricing power slips.

The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 29 during February from 24 in January. It was the highest level since April of last year. The series dates back to July 2001. The ISM-Adjusted Index (NSA) rose to 62.0 this month, the highest level since October.

The new orders measure surged to a nine-month high of 32. An increased 45% of respondents reported orders gains and a lessened 20% reported declines. The shipments reading surged to 24, up from a low of five in January. The production measure rose to an eight-month high of 31. The employment measure rose slightly to 26, its highest level in four months. It remained below, however, a high last April of 30.

Working lower were the supplier delivery times and order backlog readings to 36 and 22, respectively. The supplier delivery times index stood at a nine-month low.

Inflation pressures eased this month. The prices received index for finished products fell to 47 after rising to 49 in January. An increased 52% of respondents reported higher prices received while a marginally increased five percent reported price declines. The overall reading remained below the record level of 57 in August. The raw materials index held steady at 64 in February and remained below the record of 88 last May.

The expectations reading for six months ahead rose to 38, the highest level since last April. The orders, shipments and production measures rose but employment fell. Expected pricing power improved.

The latest survey was conducted in the five-day period from February 16-to-22 and included 93 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.

Kansas City Federal Reserve Manufacturing Survey (SA) Feb Jan Dec Feb'21 2021 2020 2019
Conditions Versus One Month Ago (% Balance)     29 24 22 27 26 0 0
ISM-Adjusted Composite Index (NSA) 62.0 59.0 59.1 60.6 62.7 50.1 50.0
   New Orders Volume 32 14 22 25 23 1 -4
   Number of  Employees 26 24 18 23 24 -4 -1
   Production 31 20 11 29 25 0 2
   Prices Received for Finished Product 47 49 46 29 43 2 7
Expected Conditions in Six Months 38 37 26 34 33 10 12
   New Orders Volume 36 30 22 41 37 12 17
   Number of Employees 52 57 34 34 41 11 15
   Production 57 44 33 47 45 14 18
   Prices Received for Finished Product 70 67 52 42 52 16 26
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