May 2019 Kansas City Fed Manufacturing Remains Deep In Contraction

Of the five regional manufacturing surveys released for May, all were in contraction.

Market expectations from Econoday were -46 to -22 (consensus -34). The reported value was -19. Any value below zero is in 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 continued to decline, but not as sharply compared to last month’s record low. Expectations for future activity rose in May, but remained slightly negative.

“Regional factory activity remained weak in May compared with a month ago and a year ago,” said Wilkerson. “Over 61% of firms reported losses in productivity as a result of the COVID-19 pandemic and 52% of survey contacts experienced ongoing supply chain disruptions.”

Factory Activity Continued to Decline in May

The month-over-month composite index was -19 in May, up somewhat from the record low of -30 in April, and similar to -17 in March (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decrease in district manufacturing activity was driven by further drops at durable goods factories, especially primary metals, fabricated metals, and transportation plants. On the other hand, activity at non-durable goods plants remained more solid. All month-over-month indexes remained negative in May. Year-over-year factory indexes fell further in May, and the composite index declined from -30 to -35. The future composite index increased from April, but remained slightly negative at -2.

Summary of all Federal Reserve Districts Manufacturing:

Richmond 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 (red 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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