The Kansas City Fed Manufacturing Survey fell at a steady pace in January, with the composite index remaining at -5, unchanged from December. Despite this, future expectations stayed positive, though they dipped slightly from 17 in December to 15 in January.
Here is an excerpt from the latest report:
Factory Activity Fell at a Steady Pace
The month-over-month composite index was -5 in January, unchanged from -5 in December and down slightly from -4 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Both durable and nondurable manufacturing activity declined slightly, with paper manufacturing marking increases and printing manufacturing marking decreases. All month-over-month indexes were negative, except for the employment, prices, and finished goods inventories indexes. Production ticked down from -6 to -9 while new orders increased from -16 to -6. Most year-over-year indexes were negative, but many picked up from last month, as the composite index increased from -16 to -9. Other than the prices indexes, capital expenditures is the only index with a positive reading, cooling from 5 to 1. The future composite index ticked down from 17 to 15 in January as expectations for future production and new orders growth cooled.
Background on Kansas City Fed Manufacturing Survey
The Kansas City Fed Manufacturing Survey is a monthly survey of ~300 manufacturing plants that provides information on current manufacturing activity and future expectations in the tenth district (Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri). The composite manufacturing index is an average of indexes on production, new orders, employment, delivery time, and raw materials inventory. This is a diffusion index, meaning negative readings indicate contraction while positive ones indicate expansion. The survey offers clues on inflationary pressures and the pace of growth in the manufacturing sector for this region of the country and the accumulated results can help trace long-term trends.