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posted on 24 March 2016

Kansas City Fed Manufacturing Contraction Lessens in March 2016

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

There were no market expectations reported from Bloomberg - and the reported value was -6. Any value below zero is contraction.

z kansas_man.PNG

The Federal Reserve Bank of Kansas City released the March 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 remained negative.

"Factories reported another decline in activity in March, although the drop was somewhat smaller than in the previous three months" said Wilkerson.


Tenth District manufacturing activity remained negative, while producers' expectations for future activity weakened. Most price indexes edged higher in March, but remained at low levels.

The month-over-month composite index was -6 in March, up from -12 in February and -9 in January (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 improvement in the index came from both durable and nondurable goods factories, particularly for chemicals, machinery, and nonmetallic mineral production. Activity remained weak in most District states. Most month-over-month indexes rose somewhat from the previous month. The new orders, order backlog, and employment indexes improved slightly but remained in negative territory. In contrast, the production index dropped from -8 to -14, and the shipments and new orders for exports indexes also fell. The raw materials inventory jumped from -16 to -2, and the finished goods inventory index also moved higher.

Year-over-year factory indexes were mixed but generally remained weak. The composite year-over-year index inched higher from -20 to -18, and the new orders, order backlog, and employment indexes also showed slight improvements. The production and shipments indexes decreased further, while the new orders for exports index remained unchanged at -13. The capital expenditures index declined from -10 to -19, its lowest level since December 2009. Both inventory indexes moved slightly higher.

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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