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posted on 23 July 2015

Kansas City Fed: Manufacturing Contraction Continues in July 2015

Of the three regional manufacturing surveys released to date for July, two show weak manufacturing growth and one is in contraction.

There were no market expectations published from Bloomberg.

z kansas_man.PNG

The Federal Reserve Bank of Kansas City released the July 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 again in July but less so than in previous months. "Our headline index was closer to zero than in May or June but was still negative, indicating further contraction in regional factory activity. However, firms expect a modest pickup in activity in coming months."


Tenth District manufacturing activity declined again in July, but less so than in previous months. Producers' remained slightly optimistic about future activity, although the majority of contacts indicated difficulties finding qualified labor. Most price indexes indicated continued rising prices, but the rate of increase slowed a bit for raw materials.

The month-over-month composite index was -7 in July, up from -9 in June and -13 in May (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The slight improvement was mostly attributable to a rebound in nondurable goods manufacturing, led by an increase in food, beverage, and paper production. However, durable goods production fell further, particularly for metals, computer, and electronic products. Production indexes improved in nearly all District states, but activity was still negative in all states but Colorado. The majority of other month-over-month indexes posted mixed results. The production index jumped from -21 to -5, and the shipments and order backlog indexes also moved higher. On the other hand, the new orders index eased from -3 to -6, and the employment index dropped to its lowest level since April 2009, with many firms noting difficulties finding qualified workers. The raw materials inventory index fell from -10 to -7, while the finished goods inventory index was unchanged.

Year-over-year factory indexes were mixed. The composite year-over-year index inched eased somewhat from -9 to - 10, and the employment index fell to a five-year low. The production index improved slightly from -21 to -20, and the shipments, new orders, and order backlog indexes also inched higher. The capital expenditures index increased markedly from 5 to 17. The raw materials inventory index rose from -4 to -1, while the finished goods inventory index fell into negative territory

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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