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posted on 27 July 2017

July 2017 Kansas City Fed Manufacturing Remains Positive But Marginally Declines

Of the four regional manufacturing surveys released for July, all were in expansion.

Analyst Opinion of Kansas City Fed Manufacturing

Kansas City Fed manufacturing has been one of the more stable districts and their index marginally declined. Key internals mixed. Note that last month the hard data showed contraction whilst most of the Fed district surveys showed expansion.

There were no market expectations from Bloomberg / Econoday. The reported value was 10. 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 expanded moderately with solid expectations for future activity.

"We've now seen four months of steady gains following more rapid growth in factory activity earlier this year," said Wilkerson. "Firms overall seem confident that moderate growth will continue."


Tenth District manufacturing activity expanded moderately again, and expectations for future activity eased slightly but remained positive. Price indexes remained mixed, with modest increases in finished goods prices.

The month-over-month composite index was 10 in July, down slightly from 11 in June but up from 8 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. Factory activity increased moderately at non-durable goods plants, particularly for chemicals and plastics, while durable activity moderated somewhat. Month-over-month indexes were mixed. The production index tumbled from 23 to 4, and the shipments index fell into negative territory for the first time since August 2016. Conversely, the employment index remained solid, while the new orders index rose modestly, and the order backlog index also increased but remained negative. The raw materials inventory index rose slightly, and the finished good inventory index increased back into positive territory.

The year-over-year factory indexes were mixed in July. The year-over-year production index declined from 43 to 28, and the composite, shipment, new orders for exports, and employment indexes eased modestly. However, the new orders, order backlog, and capital expenditures indexes moved slightly higher. The raw materials inventory index fell moderately, while the finished goods inventory index inched down from 10 to 7.

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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