September 2017 Kansas City Fed Manufacturing Remains Positive And Improves

Of the five regional manufacturing surveys released for September, all were in expansion.

There were no market expectations from Bloomberg / Econoday. The reported value was 16. 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 continued to expand at a solid pace and that firms remained optimistic about the future.

“Factories in the region reported another good month in September, with little impact overall from the Gulf Coast hurricanes,” said Wilkerson.

TENTH DISTRICT MANUFACTURING SUMMARY

Tenth District manufacturing activity continued to expand solidly in September, and expectations for future activity also remained positive. Most price indexes increased modestly, with the exception of future selling prices which eased slightly.

The month-over-month composite index was 17 in September, up from 16 in August and 10 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. Factory activity increased solidly at both durable and non-durable goods plants, particularly for chemicals, plastics, and machinery products. Month-over-month indexes were somewhat mixed. The production index remained unchanged, while the shipments, employment, and new orders for exports indexes increased mildly. In contrast, the new orders index fell from 25 to 10, and the order backlog index also decreased. The finished goods inventory index fell from 2 to -6, while the raw materials inventory index was mostly unchanged. Year-over-year factory indexes increased versus the previous month. The composite index jumped from 23 to 35, and the production, shipments, new orders, and order backlog indexes also rose considerably. The employment index increased from 22 to 30, and the capital expenditures index also edged higher. The raw materials inventory index slipped from 18 to 16, and the finished goods inventory index eased from 6 to 2. Expectations for future factory activity were mostly stable at high levels. The future composite index inched higher from 23 to 26, and the future order backlog and new orders for exports indexes also increased slightly. The future production, shipments, and employment indexes were unchanged, while the future new orders index dropped from 39 to 27. The future capital expenditures index eased from 18 to 13 after rising last month. The future raw materials inventory index jumped from -2 to 19, and the future finished goods inventory index also moved into positive territory. Most price indexes increased in September. The month-over-month finished goods price index edged up from 8 to 13, and the raw materials price index also inched higher. The year-over-year finished goods price index rose from 29 to 38, and the year-over-year raw materials price index also increased modestly. The future raw materials price index was unchanged, while the future finished goods price index eased from 34 to 29.

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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