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posted on 23 April 2015

Kansas City Fed: Manufacturing Continues to Contract in March 2015

Of the four regional manufacturing surveys released to date for April, one shows weak manufacturing growth while two are in contraction.

The market was expecting a range between -2 to +1 (consensus 0) versus the actual at -7.

z richmond_man.PNG


The Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined further in April, although producers' expectations improved slightly from last month.

"Regional factories had their worst month in quite some time, as exports continued to drop and conditions worsened among producers of oil and gas-related goods," said Wilkerson. "However, a positive development was a decline in supplier delivery times, which had been rising due to West Coast port disruptions."


Tenth District manufacturing activity declined further in April, while producers' expectations improved slightly from last month. Most price indexes continued to decrease, particularly for future raw materials. In a special question about the impact of the stronger dollar, many firms said that although it has put downward pressure on input prices, international sales have weakened considerably.

The month-over-month composite index was -7 in April, down from -4 in March and 1 in February. The last time the composite index was lower was in May 2009. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to declining durable goods manufacturing, including a sharp decline in aircraft production and continued weakness in metals and machinery. Looking across District states, the most severe declines continued to be in energy-producing states such as Oklahoma and Wyoming. Most other month-over-month indexes also decreased from the previous month. The shipments index fell from 0 to -7, and the order backlog and employment indexes dropped to their lowest levels since 2009. In contrast, the production index remained unchanged at -2, and the new orders index rose slightly but still remained negative. The finished goods inventory index increased from -1 to 5, while the raw materials inventory index was basically unchanged.

Year-over-year factory indexes were mixed but remained negative overall. The composite year-over-year index inched lower from -2 to -3, and the employment index fell to its lowest level since July 2007. The production, shipments, and order backlog indexes all improved slightly but were still in negative territory. The new orders index was unchanged, while the capital expenditures index rose from 3 to 8. The finished goods inventory index decreased from 9 to 4, but the raw materials inventory index was unchanged.

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

z richmond_man.PNG

Kansas Fed (hyperlink to reports):

z kansas_man.PNG

Dallas Fed (hyperlink to reports):

z dallas_man.PNG

Philly Fed (hyperlink to reports):

z philly fed1.PNG

New York Fed (hyperlink to reports):

z empire1.PNG

Federal Reserve Industrial Production - Actual Data (hyperlink to report):

Holding this and other survey's Econintersect follows accountable for their predictions, the following graph compares the hard data from Industrial Products manufacturing subindex (dark blue bar) and US Census manufacturing shipments (lighter blue bar) to the Kansas City Fed survey (light green bar).

Comparing Surveys to Hard Data:

z survey1.png

In the above graphic, hard data is the long bars, and surveys are the short bars. The arrows on the left side are the key to growth or contraction.

Steven Hansen

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