TENTH DISTRICT MANUFACTURING ACTIVITY DECLINED FURTHER
Federal Reserve Bank of Kansas City Releases December Manufacturing Survey
The Federal Reserve Bank of Kansas City released the December 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 further in December, though by smaller amount than in October or November. Factories’ production expectations were somewhat more optimistic than last month, but a higher share of firms plan to decrease employment in coming months.
“We saw factory activity decline for the third straight month, which many firms blamed on the uncertainty created by the fiscal cliff talks,said Wilkerson.
Tenth District manufacturing activity declined further in December, though by a smaller amount than in October or November. Factories’ production expectations were somewhat more optimistic than last month, but a higher share of firms plan to decrease employment in coming months. Approximately half of all contacts cited fiscal policy uncertainty as having impacted their hiring decisions. Price indexes mostly increased, particularly for future raw materials, with the increase driven heavily by food prices.
The month-over-month composite index was -2 in December, up slightly from -6 in November and -4 in October (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity was stable at most durable goods-producing plants, while nondurable producers cited further declines. Most other month-over-month indexes also edged up slightly in December but remained below zero. The production index inched higher from -6 to -5, and the new orders, order backlog, and new orders for exports indexes also rose but remained negative. In contrast, the employment and shipments indexes fell after rising last month. The raw materials inventory index increased from -7 to 1, but the finished goods inventory index decreased into negative territory.
Most year-over-year factory indexes fell from the previous month, with several indexes at their lowest levels since early 2010. The composite year-over-year index eased from 9 to 7, and the production, shipments, and new orders indexes all posted three-year lows. The employment index decreased from 22 to 13 after rebounding solidly last month. The order backlog index was unchanged, while the capital expenditures and new orders for exports indexes inched higher. Both inventory indexes increased for the second straight month.
Summary of all Federal Reserve Districts Manufacturing:
Richmond Fed (hyperlink to reports):
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Kansas 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 (lighter blue bar) to the Kansas City Survey (pea-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.
