July 2018 Kansas City Fed Manufacturing Declined But Remained Firmly In Expansion

Of the four regional manufacturing surveys released for July, all were in expansion.

There were no market expectations from Nasdaq / Econoday. The reported value was 23. Any value below zero is contraction.

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The Federal Reserve Bank of Kansas City released the July 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 solidly, and expectations for future growth remained strong. “Our composite index came down slightly from record highs in recent months,” said Wilkerson. “Many firms remain concerned about labor availability and tariffs, but optimism is still high.”

Tenth District manufacturing activity continued to expand solidly in July, with the composite index dipping slightly after May’s record-high reading. Expectations for future growth remained high, despite many firms citing labor tightness and tariffs as increasingly worrisome. Price indexes also continued to rise. The month-over-month composite index was 23 in July, down from readings of 28 in June and 29 in May (Tables 1 & 2, Chart 1). 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 durable and nondurable goods plants, particularly for petroleum and coal products, minerals, fabricated metal, computers and electronics, and transportation equipment. Month-over-month indexes were mixed compared with the previous month, but most indexes remained at high levels. The employment index inched up while the order backlog and new orders for exports indexes were virtually unchanged. The production and shipments indexes fell moderately, and the new orders index eased somewhat. The raw materials index fell modestly and the finished goods inventory index also dipped slightly. Most year-over-year factory indexes inched up in July. The composite index increased marginally from 43 to 44. The production, order backlog, capital expenditures, and new orders for exports all improved. However, the shipments and new orders indexes declined modestly and the employment index was mostly unchanged. The raw materials inventory index dipped from 36 to 32 and the finished goods inventory index eased from 26 to 23.

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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