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posted on 28 July 2016

July 2016 Kansas City Fed Manufacturing Back In Contraction

Of the five regional manufacturing surveys released for July, three are in expansion with two 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 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 modestly.

"Factories in our region reported a slight pullback in July following modest expansion in June," said Wilkerson. "However, their expectations for future activity continued to increase."


Tenth District manufacturing activity declined modestly after last month's rebound. Expectations for future activity continued to increase, and the price indexes were mixed.

The month-over-month composite index was -6 in July, down from 2 in June and -5 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. Non-durable goods producing plants reported a smaller decline in activity, but durable goods production dropped sharply, particularly for metals and electronic equipment. Most month-over-month indexes were lower than in June. The production index dropped from 12 to -15, and the shipments and news orders indexes also fell. The employment index inched down to -5, while the order backlog index remained unchanged. The raw materials inventory index eased further, while the finished goods inventory index increased from -5 to 5.

Year-over-year factory indexes were mixed but remained weak. The composite year-over-year index was flat at -15, while the production, shipments, and new orders indexes edged down slightly. The order backlog index was unchanged, and the employment index inched higher. The capital spending index fell from -3 to -14, reversing the increase reported in June. Both inventory indexes increased modestly but remained negative.

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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