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posted on 25 August 2016

August 2016 Kansas City Fed Manufacturing Remains In Contraction

Of the four regional manufacturing surveys released for August, three are in contraction with one in expansion.

There were no market expectations reported from Bloomberg - and the reported value was -4. Any value below zero is contraction.

z kansas_man.PNG

The Federal Reserve Bank of Kansas City released the August 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 continued to decline modestly.

"Firms reported another slight drop in activity in August but remained moderately optimistic about activity heading forward," said Wilkerson.


Tenth District manufacturing activity continued to decline modestly. Expectations for future activity remained solid, and the price indexes were mixed. In a special question this month, most firms reported no plans to change employee benefits for next year, but more firms expect decreases in benefits than expect increases.

The month-over-month composite index was -4 in August, up from -6 in July but down from 2 in June (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 production continued to grow modestly, while durable goods activity was less negative than last month, particularly for machinery and electronic equipment. Most month-over-month indexes were similar to levels posted the previous month. The production index improved from -15 to -7, and the shipments index also rose somewhat. The new orders and order backlog indexes remained moderately negative, while the employment and new export orders indexes fell slightly. The raw materials inventory index increased from -7 to -1, while the finished goods inventory index fell back into negative territory. Year-over-year factory indexes improved slightly but remained below zero.

The composite year-over-year index inched higher from -15 to -12, and the shipments, new orders, and order backlog indexes also rose slightly. The production, capital spending, and new orders for exports indexes were all unchanged at negative levels. The employment index dropped from -12 to -15 after improving last month. The raw materials inventory index increased from -14 to -10, while the finished goods inventory index fell further.

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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