Kansas City Fed: Manufacturing Activity Expands in May 2013

This is the first manufacturing survey in May which shows expansion – and it was the first expansion after seven months of contraction. Please see below.

TENTH DISTRICT MANUFACTURING SURVEY IMPROVED SOMEWHAT

Tenth District manufacturing activity improved somewhat, rising above zero for the first time in seven months, and producers’ expectations for future activity also increased. Most price indexes recorded little changes from the previous month.

The month-over-month composite index was 2 in May, up from -5 in both April and March (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The rise in production came from both durable and non-durable goods-producing plants, with the biggest increase coming from machinery and metals manufacturing. Other month-over-month indexes were mixed. The production index edged up from 1 to 5, and the shipments, new orders, and new orders for export indexes also rose. In contrast, the employment index fell from -3 to -7, while the order backlog index was unchanged. The raw materials inventory index rebounded from -17 to 0, and the finished goods inventory index moved slightly higher.

The majority of year-over-year factory indexes improved somewhat in May. The composite year-over-year index increased from -6 to 0, and the production, shipments, and new orders indexes also rose. The capital expenditures index rebounded from 7 to 11 after falling last month, while the order backlog and employment indexes were basically unchanged. The new orders for exports index climbed higher after reaching its lowest level in nearly four years last month. Both inventory indexes improved modestly.

Most future factory indexes rebounded after falling last month. The future composite index increased from 4 to 11, and the future production, shipments, and new order indexes improved markedly after posting four-year lows last month. The future order backlog index edged up, and the future capital expenditure index posted considerable gains. In contrast, the future employment index was unchanged, while the future new orders for exports indexes eased slightly. The raw materials inventory index rose from -7 to 1, and the finished goods inventory index also moved higher.

Most price indexes remained stable from the previous month. The month-over-month raw materials price index was unchanged at 7, while the finished goods price index edged down to its lowest level since July 2010. The year-over-year raw materials and finished goods price indexes moved slightly lower. The future raw materials price index inched higher from 38 to 41, while the future finished goods price index eased somewhat, indicating fewer firms plan to pass recent cost increases through to customers.

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.

Steven Hansen