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posted on 22 October 2015

Kansas City Fed Manufacturing Improves to Barely in Contraction in October 2015

Of the three regional manufacturing surveys released to date for October, all are in contraction.

There were no market expectations reported from Bloomberg - and the reported value was -1. Any value below zero is contraction.

z kansas_man.PNG

The Federal Reserve Bank of Kansas City released the October 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 steadied somewhat and was expected to remain largely unchanged heading forward.

"Following six months of composite index readings of worse than -6, this month's reading of -1 was somewhat encouraging," said Wilkerson. "Modest increases in new orders and production nearly offset declines in employment, supplier delivery time, and inventory indexes."


Tenth District manufacturing activity steadied somewhat, and expectations for future activity were largely flat following last month's more negative reading. Most price indexes edged higher for the first time in several months.

The month-over-month composite index was -1 in October, up from -8 in September and -9 in August (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Most of the improvement came from nondurable goods activity, with the exception of plastics products which continued to fall. Some durable goods also showed improvement in October, particularly machinery and primary metals, but other products such as fabricated metals, electronic equipment, and aircraft remained weak. The majority of other month-over-month indexes edged higher but still remained sluggish. The production index increased from 1 to 4, and the shipments, employment, and order backlog indexes also improved somewhat but stayed negative. The new orders index jumped from -8 to 7, its highest level in 10 months. The new orders for exports index fell further from -3 to -10, and both inventory indexes remained negative.

Year-over-year factory indexes were mixed but generally weaker than last month. The composite year-over-year index fell from -9 to -13, and the new orders and employment indexes also declined further. The capital expenditures index dropped from 8 to -3, its lowest level since January 2013. The production and shipments indexes both improved modestly but remained in negative territory. The raw materials inventory index decreased from -5 to -10, and the finished goods inventory index also decreased.

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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