May 2017 Kansas City Fed Manufacturing Remains Positive and Improves

Of the four regional manufacturing surveys released for May, one is in contraction whilst the rest are in expansion.

Market expectations reported from Bloomberg / Econoday was 4 to 10 (consensus 7) – and the reported value was 8. Any value below zero is contraction.

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The Federal Reserve Bank of Kansas City released the May 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 moderately with strong expectations for future activity.

“After slowing from a rapid rate of growth in February and March, we’ve seen more moderate growth the past two months,” said Wilkerson. “But firms are about as optimistic about future growth as they’ve ever been.”

TENTH DISTRICT MANUFACTURING SUMMARY

Tenth District manufacturing activity continued to expand at a moderate pace in May, and expectations for future activity increased strongly. Price indexes were mixed, but recorded little change overall.

The month-over-month composite index was 8 in May, up from 7 in April but down from 20 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 at durable manufacturing plants eased slightly but remained positive, while nondurable activity improved, particularly for plastics and chemicals. Month-over-month indexes were mixed with little change overall. The production and shipments indexes edged slightly lower, while the employment and order backlog indexes inched higher. The new orders and new orders for exports indexes were both basically unchanged. The finished goods inventory index fell from 8 to 0, while the raw materials inventory index was stable.

Expectations for future factory activity rebounded to strong levels. The future composite index increased from 17 to 30, and the future production, shipments, new orders, and order backlog indexes also rose considerably. The future capital spending index climbed from 11 to 23, while the future employment index eased slightly. Both inventory indexes increased 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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