Research >> Economics
Kansas City Fed Manufacturing Activity Contracted Further
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Tenth District manufacturing activity contracted further in February, and factories’ expectations weakened somewhat. Some contacts noted disruptions in shipments due to bad weather, and many firms expressed concern about possible direct and indirect impacts on orders should federal spending cuts occur with sequestration. Most price indexes were little changed.
The month-over-month composite index was -10 in February, down from -2 in January and -1 in December. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity declined at both durable and non-durable goods-producing plants, with the exception of chemicals and technology products. Most other month-over-month indexes also fell. The production index decreased from -3 to -11, and the shipments, new orders, and order backlog indexes also declined to their lowest levels since early 2009. In contrast, the employment index improved from -8 to 2, and the new orders for exports index climbed towards positive territory. The raw materials inventory index decreased from -4 to -8, while the finished goods inventory index increased slightly.
The majority of year-over-year factory indexes fell further, with several indexes continuing to post two-year lows. The composite year-over-year index decreased from 1 to -4, its lowest level since March 2010, and the shipments, new orders, and order backlog indexes also eased. The employment index inched lower but remained positive, and the production index edged up from -9 to -7. Both inventory indexes fell after rising last month.
Future factory indexes were mixed, although most indexes remained in positive territory. The future composite index moderated from 7 to 4, and the future production, new orders, and employment indexes also eased slightly. Both future inventory indexes also fell further into negative territory. On the positive side, the future capital expenditures index jumped from 3 to 18 after falling for three straight months, and the future new orders for exports index also edged higher. The future order backlog index rose modestly from 2 to 5, while the future shipments index was unchanged.
Most price indexes recorded little change from the previous month. The month-over-month raw materials price index rose from 23 to 25, while the finished goods price index eased somewhat. The year-over-year raw materials index increased from 50 to 60, while the finished goods index moved slightly lower. The future raw materials price index increased modestly from 47 to 51, while the future finished goods price index was unchanged, indicating the same share of firms plan to pass recent cost increases through to customers.
Posted: February 28, 2013 Thursday 11:00 AM