October 2019 Kansas City Fed Manufacturing Remains In Contraction

Of the four regional manufacturing surveys released for October, three were in expansion and one was in contraction.

Market expectations from Econoday were —- to —- (consensus —). The reported value was -3. Any value below zero is in contraction.

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The Federal Reserve Bank of Kansas City released the October 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 eased slightly in October, and expectations for future activity inched lower but remained slightly positive.

“Overall regional factory activity declined again in October,” said Wilkerson. “This was driven by further deterioration in durable goods production, as nondurable manufacturing expanded slightly for the second straight month.”

Tenth District manufacturing activity eased slightly in October, and expectations for future activity inched lower but remained slightly positive (Chart 1). The month-over-month price index for raw materials declined at a slower rate, while the price index for finished products expanded slightly. District firms expected prices to increase over the next 6 months.

Factory Activity Eased Slightly in October

The month-over-month composite index was -3 in October, down slightly from -2 in September, but above -6 in August (Table 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decline in district manufacturing activity continued to be driven by slower activity at durable goods plants, especially from decreases in nonmetallic mineral products, primary metal, fabricated metal products, machinery, computer and electronic products, and transportation equipment manufacturing. Most month-over-month indexes declined in October, especially for the new orders index. However, the production index remained positive, and the supplier delivery time index inched higher. Year-over-year factory indexes were somewhat mixed in October, but the composite index was again unchanged at -1. The future composite index remained positive, but eased from 5 to 2, the lowest future composite index since March 2016.

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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