March 2017 Kansas City Fed Manufacturing At Highest Level Since March 2011

Of the three regional manufacturing surveys released for March, all are in expansion..

There were no market expectations reported from Bloomberg – and the reported value was 20. Any value below zero is contraction.

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The Federal Reserve Bank of Kansas City released the March 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 strengthened further with strong expectations for future activity.

“Our composite index accelerated again, and has only been higher one time in the last 15 years,” said Wilkerson. “The future employment index was the strongest in the 23-year history of the survey.”

TENTH DISTRICT MANUFACTURING SUMMARY

Tenth District manufacturing activity strengthened further in March, and many indexes of expectations for future activity were at or near record highs. Most price indexes increased moderately. The month-over-month composite index was 20 in March, its highest reading since March 2011, up from 14 in February and 9 in 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. Activity in both durable and nondurable goods plants increased, particularly for metals, computer, electronic, and aircraft products.

Most month-over-month indexes rose further in March. The production and shipments indexes increased considerably, while the new orders and order backlog indexes rose more moderately but remained high. The employment index moderated slightly from 17 to 13, and the new orders for exports index also eased. Both inventory indexes increased for the second straight month. Most year-over-year factory indexes improved from the previous month. The composite year-over-year index grew from 6 to 14, and the production, shipments, new orders, and order backlog indexes also increased. The employment index jumped from -2 to 17, while the capital expenditures index eased slightly. The raw materials inventory index decreased from 3 to 1, while the finished goods inventory index moved into positive territory.

Expectations for future factory activity increased further to some of the highest levels in survey history. The future composite index edged up from 29 to 32, its highest reading ever. The future production, shipments, and new orders indexes all increased to near-record highs. The future employment index jumped from 30 to 43, its highest level in survey history, and the future capital expenditures index increased moderately. The future raw materials inventory index decreased from 20 to 8, and the future finished goods index also fell modestly.

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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