Of the three regional manufacturing surveys released to date for October, all show manufacturing expansion.
The market was expecting a range between -2 to 7 (consensus 6) versus the actual at 4.
GROWTH IN TENTH DISTRICT MANUFACTURING ACTIVITY GREW MODESTLY
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 grew at a modest pace, and producers’ optimism for future activity remained solid.
“Regional factory growth remained sluggish in October, weighed down by weak production in agriculture-related sectors, said Wilkerson. However, firms’ capital spending plans remained solid.”
TENTH DISTRICT MANUFACTURING SUMMARY
Tenth District manufacturing activity grew at a modest pace in October, and producers’ optimism for future activity remained solid. Firms continued to note difficulties in attracting and retaining certain key workers, particularly machinists and welders. Most price indexes were down slightly from the previous month.
The month-over-month composite index was 4 in October, down from 6 in September but slightly higher than 3 in August (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Producers of metal products and computer and electronic equipment reported the strongest growth, while contacts at food and machinery plants reported further declines in activity. Most other month-over-month indexes were also lower than last month. The production index fell from 12 to 3, and the shipments, new orders, and employment indexes also moved lower. The new orders for exports index decreased from -1 to -9, and the order backlog index posted its lowest level in over a year. The raw materials inventory index increased from 0 to 4, while the finished goods inventory index fell into negative territory.
Most year-over-year factory indexes moved slightly higher. The composite year-over-year index rose from 15 to 17, and the production, shipments, and new orders indexes also increased. The employment index edged up from 12 to 16, and the capital expenditures index reached a two-year high. In contrast, the order backlog index decreased from 12 to 6, and the new orders for exports index fell into negative territory. Both inventory indexes moved lower but remained positive.
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.