September 2016 Kansas City Fed Manufacturing Rebounds

Of the three regional manufacturing surveys released for September, two are in expansion and one is in contraction..

There were no market expectations reported from Bloomberg – and the reported value was +6. Any value below zero is contraction.

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The Federal Reserve Bank of Kansas City released the September 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 increased moderately.

“For the second time in four months we had a positive reading on our composite index,” said Wilkerson. “This followed 15 straight months of contraction and suggests regional factory activity may be stabilizing.”

TENTH DISTRICT MANUFACTURING SUMMARY

Tenth District manufacturing activity rebounded moderately in September, and producers’ expectations for future activity remained positive. The price indexes were mixed.

The month-over-month composite index was 6 in September, up from -4 in August and -6 in July (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Non-durable goods activity grew modestly, while durable goods production grew strongly, particularly for machinery and metals production. Most month-over-month indexes improved markedly in September. The production index climbed from -7 to 15, and the shipments and new orders indexes also rose considerably. The employment, new export orders, order backlog indexes were modestly higher, while the supplier delivery time index fell into negative territory. The raw materials inventory index rose from -1 to 8, and the finished goods inventory index inched higher.

Year-over-year factory indexes improved further but remained below zero. The composite year-over-year index inched higher from -12 to -9, and the new orders and new orders for exports indexes also rose somewhat. The production, shipments, and capital spending indexes were moderately higher, while the employment and order backlog indexes were unchanged. The supplier delivery time index eased to -5. The raw materials inventory index increased from -10 to -4, and the finished goods inventory index moved up to -7.

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 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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