June 2019 Kansas City Fed Manufacturing Now Showing No Growth

Of the five regional manufacturing surveys released for June, three were in expansion, one in contraction, and one at zero.

Market expectations from Econoday were 2 to 6 (consensus 4). The reported value was 0. Any value below zero is in contraction.

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The Federal Reserve Bank of Kansas City released the June 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 was flat in June, while expectations for future activity remained solid.

“Regional factory growth was relatively flat,” said Wilkerson. “However, nearly 70 percent of manufacturing contacts reported confidence in the U.S. economy, and a majority have not changed their 2019 plans for employment and capital spending.”

Tenth District manufacturing activity was flat in June, while expectations for future activity remained solid (Chart 1). Price indexes were lower than a month ago, indicating that prices continue to rise but at a slower pace. The raw materials price index was lower than a year ago, and expectations for future price indexes also declined.

Factory Activity Mostly Flat in June

The month-over-month composite index was 0 in June, slightly lower than 4 in May and 5 in April (Table 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The change in manufacturing activity was mostly driven by a decline at durable production plants, especially for computers, electronic products, and transportation equipment. Most monthover-month indexes edged lower in June, with a number of indexes decreasing, including the materials inventory index. However, the new orders index inched higher. Nearly all of the year-over-year factory indexes decreased to their lowest levels since late 2016, and the composite index fell from 23 to 4. The future composite index remained solid, inching down from 12 to 11, while expectations for production and new orders moved higher.

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

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Dallas Fed (hyperlink to reports):

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Philly Fed (hyperlink to reports):

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New York Fed (hyperlink to reports):

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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 (red bar) to the Kansas City Fed survey (light green bar).

Comparing Surveys to Hard Data:

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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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