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posted on 18 December 2015

Kansas City Fed Manufacturing Also Contracting in December 2015

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

There were no market expectations reported from Bloomberg - and the reported value was -9. Any value below zero is contraction.

z kansas_man.PNG

The Federal Reserve Bank of Kansas City released the December 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 moderately, although expectations for future activity remained solid.

"After two months of mostly steady activity, regional factories pulled back again in December," said Wilkerson. "The weakest activity was in energy-concentrated states."


Tenth District manufacturing activity declined moderately in December, reversing gains from the last several months, while producers' expectations for future activity remained solid.

Most price indexes continued to ease further. The month-over-month composite index was -9 in December, down from 1 in November and -1 in October (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 decline came from both durable and nondurable goods factories, particularly for food and beverage, computer and electronic equipment, and machinery production. The weakest activity continues to be in energy-concentrated states. The majority of other month-over-month indexes also decreased. The production index fell from 3 to -8, and the shipments, new orders, and employment indexes dropped modestly. In contrast, the order backlog index improved somewhat from -17 to -2. The raw materials inventory fell from 3 to -16, and the finished goods inventory index also moved further into negative territory.

Most year-over-year factory indexes declined in December after improving slightly last month. The composite yearover-year index fell from -5 to -15, a six-year low, and the production, shipments, new orders, and order backlog indexes also decreased moderately. The employment index dropped from -8 to -14, and the capital expenditures index posted its lowest level since August 2010. Both inventory indexes decreased sharply from the previous month.

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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