LATEST: The Kansas City Fed’s monthly report on regional manufacturing activity is out.
The headline index unexpectedly fell to 2 in September from August’s 8 reading. Economists were looking for no change.
The decline in the index suggests that conditions are still improving, but at a slower pace.
Below is a summary of the data from the release:
Growth in Tenth District manufacturing activity moderated somewhat in September but remained positive. Producers’ expectations for future activity increased markedly, while several manufacturers commented on rising labour shortages and wage pressures. Price indexes decreased slightly or were largely unchanged.
The month-over-month composite index was 2 in September, down from 8 in August and 6 in July (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The production index decreased at both durable and non-durable goods-producing plants, with the exception of machinery and computer equipment factories which posted slight gains. Most other month-over-month indexes also fell. The production index plunged from 21 to 4, and the shipments, new orders, and order backlog indexes also decreased. The employment index eased after rising last month, and the new orders for exports index fell back into negative territory. The raw materials inventory index stayed flat at 0, while the finished goods inventory index decreased modestly.
Below are comments from respondents to the Kansas City Fed’s monthly survey:
- “General labour is very difficult to find in order to fill our manufacturing positions. Educated workers are even harder to find.”
- “Our starting wage has dropped because we are having to train people that come to us with no experience or skill.”
- “We keep hearing the economy is getting better, but we have not seen an improvement.”
- “Our automotive business has done well this year, however our other business including aerospace has been flat. We are seeing some upward price pressure on our raw materials.”
- “The biggest issues we are facing are medical insurance, workers compensation insurance, and increased government regulation.”
- “We are closing our facility and moving most of the product to our Mexico plant.”
- “Demand for compressors to transfer natural gas continues to be strong.”
- “Have difficulty in hiring engineers and accountants.”
- “Our industry has lost labour force to the oil and gas industry, which is not really paying more hourly but is giving a lot more overtime.”