Research >> Economics
Kansas City Fed Manufacturing Activity rebounded in May
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Growth in Tenth District manufacturing activity rebounded in May, and producers were more optimistic than in previous months. The majority of producers reported stable or increasing capital spending plans in the next six to twelve months, with very few anticipating a decrease. Most price indexes moderated, although more producers than in April plan to raise selling prices in future months.
The month-over-month composite index was 9 in May, up from 3 in April and equal to 9 in March. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing growth increased in most durable and nondurable goods-producing plants, with the exception of metal products which were largely unchanged. Most other month-over-month indexes also rose in May. The production index jumped from 0 to 17, and the shipments, new orders, and order backlog indexes also improved markedly. In contrast, the employment index eased slightly from 12 to 8. The raw materials inventory index decreased from 5 to 1, while the finished goods inventory index moved into positive territory.
The majority of year-over-year factory indexes edged higher in May. The composite year-over-year index rose from 24 to 27, and the production and new orders indexes also increased. The order backlog index posted its highest level in nearly 7 years, and the capital expenditures index edged up from 18 to 21. However, the employment index fell slightly from 31 to 28 and both inventory indexes decreased somewhat.
Future factory indexes rose solidly after two months of slight moderation. The future composite index increased from 12 to 17, and the future new orders and order backlog indexes also improved. The future production and shipments indexes posted their highest levels since early 2011, and the future employment index inched higher from 15 to 18. The future capital spending index jumped from 6 to 19, and the future new orders for exports index increased after 3 months of declines. The future raw materials inventory index climbed from -8 to 0, and the future finished goods inventory index also rose.
Most price indexes fell marginally, with the exception of future finished goods prices. The month-over-month finished goods price index decreased to its lowest level in nearly three years, and the raw materials price index dropped from 19 to 11, also a three-year low. The year-over-year raw materials price index decreased from 74 to 66, and the finished goods price index also edged lower. The future raw materials price index eased from 54 to 48, while the future finished goods price index increased, indicating more firms plan to pass recent cost increases through to
customers.
Posted: May 24, 2012 Thursday 11:30 AM