October 2016 Kansas City Fed Manufacturing Remains In Expansion

Of the four regional manufacturing surveys released for October, two are in expansion and two are 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 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 expanded again at a moderate pace.

“This was the second consecutive month of rising factory activity in the Tenth District, the first time that has happened in nearly two years,” said Wilkerson. “Much of the improvement recently has been in machinery and fabricated metals manufacturing.”

TENTH DISTRICT MANUFACTURING SUMMARY

Tenth District manufacturing activity expanded again at a moderate pace, and producers’ expectations for future activity increased further. The price indexes were mixed, but mostly little changed.

The month-over-month composite index was 6 in October, equal to 6 in September and up from -4 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. The increase was mostly attributable to continued strength in metals, machinery, and chemical production. Most month-over-month indexes improved further in October. The production index edged higher from 15 to 18, and the shipments, new orders, and order backlog also rose moderately. The employment index climbed from -3 to 7, its highest level in almost two years. The raw materials inventory index dropped from 8 to -11, and the finished goods inventory index also fell substantially.

Most year-over-year factory indexes remained below zero. The composite year-over-year index inched lower from -9 to -11, and the production, shipments, and new orders for exports indexes also fell. The new orders, order backlog, and employment indexes were slightly higher but still in negative territory. The capital expenditures index decreased modestly from -4 to -7, after rising last month. The raw materials inventory index fell from -4 to -19, and the finished goods inventory index also moved lower.

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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