February 2019 Kansas City Fed Manufacturing Again Declined And Is Barely Positive

Of the five regional manufacturing surveys released for February, all were in expansion except one with most growth rates slowing.

Analyst Opinion of Kansas City Fed Manufacturing

Kansas City Fed manufacturing has been one of the more stable districts and their index is now well below the range seen in the last 12 months - and this month it is barely positive. Note that the key internals declined with new orders in contraction and backlog remaining deeply in contraction. This is a much worse report than last month.

There were no market expectations from Econoday. The reported value was 1. Any value below zero is contraction.

(Click on image to enlarge)

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The Federal Reserve Bank of Kansas City released the February 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 was up only slightly, while expectations for future activity remained positive but were slightly lower than in previous months.

"Regional factories saw hardly any growth in February," said Wilkerson. "More than threequarters of firms reported difficulties in finding workers, despite wage increases.

Tenth District manufacturing activity was up only slightly in February, while expectations for future activity remained positive but were slightly lower than in previous months (Chart 1). The month-over-month finished goods and raw materials price indexes both eased down in February. Price expectations for the next six months also edged lower. Factories Report Steady Activity in February The month-over-month composite index was 1 in February, down from 5 in January and 6 in December (Table 1).

The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.

Factories expanded durable goods production, particularly machinery and transportation equipment, while manufacturing of more non-durable goods, including food and beverage products, declined. Most month-over-month indexes decreased in February, with production, shipments, and new orders dropping into negative territory. However, the month-over-month employment index expanded moderately. Most year-over-year factory indexes declined from the previous month but remained positive, and the composite index dipped from 31 to 23. Future factory activity expectations continued to drift down, but also remained positive. The future composite index dipped from 18 to 13, the lowest future composite index since late 2016, but the future employment index expanded solidly.

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