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posted on 28 January 2016

Kansas City Fed Manufacturing Contraction Continues in January 2016

Of the four regional manufacturing surveys released to date for January, three are in contraction and one is barely in expansion.

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 January 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 fell again in January.

"We saw another moderate drop in regional factory activity in January, marking the eleventh straight month of slight to moderate declines," said Wilkerson. "However, firms remained optimistic that conditions would improve slightly in coming months."


Tenth District manufacturing activity fell again in January, while producers' expectations for future activity remained solid. Most price indexes declined modestly.

The month-over-month composite index was -9 in January, unchanged from -9 in December but down from -1 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity improved somewhat at nondurable goods factories, while durable goods saw further weakening, particularly for machinery and computer and electronic equipment. Most month-over-month indexes were mixed. The production and shipments indexes remained slightly negative, while the employment and new orders for exports indexes improved. Conversely, the new orders and order backlog indexes both fell to their lowest levels in six years. The raw materials inventory increased from -15 to -2, and the finished goods inventory index also rose but remained in negative territory.

Year-over-year factory indexes were mixed in January. The composite year-over-year index inched up from -15 to -13, and the production, shipments, and new orders indexes also moved higher but remained well below zero. The employment index was largely unchanged at -15. The order backlog index fell to a six year low, and the capital expenditures index declined again. Both inventory indexes eased slightly.

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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