Photo: Flickr / photoguyinmo
Nice number!The Kansas City Fed Manufacturing Index came in at +8 vs. expectations of +3. And ahead of last month’s +5.
Growth in Tenth District manufacturing activity improved moderately in August, and producers optimism continued to edge higher. Price indexes were relatively stable, although the share of producers planning to raise prices increased further. Several respondents said the ongoing drought has negatively affected their business, mainly through higher input costs and slower sales for agricultural-related products.
The month-over-month composite index was 8 in August, up from 5 in July and 3 in June (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing growth increased at most durable- and nondurable goods-producing plants, particularly for chemical, metal, and transportation products. Most other month-over- month indexes also increased in August. The production index climbed from 2 to 7, and the shipments, new orders, and order backlog indexes all moved back into positive territory. The new orders for export index inched higher but remained below zero, while the employment index dipped slightly from 6 to 2. Both inventory indexes increased for the second straight month.
Growth in year-over-year factory indexes was mixed. The composite year-over-year index edged down from 20 to 18, and the new orders index also decreased somewhat. The capital expenditures index fell for the first time in seven months, while the new orders for exports index was unchanged. The production index rose from 19 to 25, and the shipments, order backlog, and employment indexes also improved over last month. The raw materials inventory index dropped from 26 to 16, but the finished goods inventory index increased for the second straight month.
Most future factory indexes improved further after rebounding last month. The future composite index edged up from 13 to 16, and future production and shipments indexes increased notably after no change last month. The future order backlog index jumped from 3 to 14, while the employment index remained unchanged. In contrast, the future new orders index eased slightly from 22 to 21, and the future capital expenditures and new orders for exports indexes also fell modestly. The future finished goods inventory index rose from 5 to 10, and the raw materials inventory index moved into positive territory.
Price indexes were mixed, though most changes were minimal. The month-over-month finished goods price index posted no change, while the raw materials price index increased for the second straight month. The year-over-year finished goods index stayed flat at 35, but the raw materials index decreased slightly to its lowest level in nearly two years. The future raw materials price index eased slightly after a big increase last month, while the future finished goods price index continued to climb higher, indicating more firms plan to pass recent cost increases through to customers.