October 2020 Kansas City Fed Manufacturing Marginally Improves

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

Market expectations from Econoday were +11 to +20 (consensus +13). The reported value was 13. Any value below zero is in contraction.

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The Federal Reserve Bank of Kansas City released the October 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 rose again in October but remained lower than a year ago, while expectations for future activity continued to expand.

“”Regional factory activity expanded in October but remained below year-ago levels for over half of firms,” said Wilkerson. “While 55% of firms reported that employment was at or above preCOVID levels, most expected that sales and capital spending would not return to pre-COVID levels in the immediate future.”

Factory Activity Rose Again

The month-over-month composite index was 13 in October, up slightly from 11 in September and similar to 14 in August (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity at non-durable and durable goods factories expanded at a similar pace. The increase in activity was faster at fabricated metal and machinery plants in October. Nearly all of the month-over-month indexes remained positive, indicating continued expansion. Production, shipments, new orders, employment, and employee workweek indexes rose faster than in September, but order backlog and supplier delivery time increased at a slower pace. The indexes for new orders for exports and materials inventories inched higher, while finished goods inventories declined slightly. Most year-over-year factory indexes remained negative in October but less so than last month, as the composite index moved from -21 to -12. The future composite index expanded further in October, increasing from 18 to 21.

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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