Two regional surveys released to date in December show expansion, while one is showing contraction.
TENTH DISTRICT MANUFACTURING ACTIVITY FELL SLIGHTLY
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 fell slightly in December, but producers’ expectations for future activity improved modestly.
“The drop in regional factory activity appears like it will be temporary, and was at least partly driven by bad weather”, said Wilkerson. “Firms remain generally optimistic about the first half of 2014, despite continued uncertainty about fiscal policy and regulations.”
TENTH DISTRICT MANUFACTURING SUMMARY
Tenth District manufacturing activity fell slightly in December, but producers’ expectations for future activity improved modestly. Some contacts cited poor weather, and continued fiscal and regulatory uncertainty as reasons for the December slowdown. Slightly over half of all respondents noted labor shortages, with nearly one third indicating additional wage pressures. Current price indexes posted few changes, but expectations for future prices continued to rise.
The month-over-month composite index was -3 in December, down from 7 in November and 6 in October. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The production index fell at nearly all types of durable goods plants, while production at nondurable goods plants declined at a slower rate than last month. Most other month-over-month indexes decreased over the last month. The production index plunged from 11 to -17, and the new orders, shipments, and order backlog indexes all dropped considerably. The employment index edged lower from 6 to 2, and the new orders for exports index also eased somewhat. The raw materials inventory index moved into negative territory, while the finished goods inventory index improved slightly.
The majority of year-over-year factory indexes moderated in December. The composite year-over-year index decreased from 9 to 3, and the production, shipments, and order backlog indexes fell below zero. The new orders index dropped from 21 to 6, while the capital expenditures index was unchanged. The employment index edged higher from 4 to 7, and both inventory indexes increased slightly.
Most future factory indexes continued to improve somewhat and were at solid levels. The future composite index rose from 12 to 14, and the future production, shipments, and new orders indexes also increased. The future order backlog index edged up from 7 to 8. The future employment index eased from 20 to 14–still the second highest level posted this year–and the future capital expenditures index fell slightly. The future raw materials inventory index decreased from 2 to 0, and the future finished goods inventory index also edged lower.
Price indexes were mixed. The month-over-month raw materials price index rose from 17 to 21, while the finished goods price index eased somewhat. The year-over-year finished goods price index fell modestly, but the raw materials price index was basically unchanged. The future raw materials price index increased from 31 to 37, and the future finished goods price index moved higher, indicating more firms plan to pass recent cost increases through to customers.
Summary of all Federal Reserve Districts Manufacturing:
Richmond Fed (hyperlink to reports):
Kansas Fed (hyperlink to reports):
Dallas Fed (hyperlink to reports):
Philly Fed (hyperlink to reports):
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New York Fed (hyperlink to reports):
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
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.