The Kansas City Fed Manufacturing Survey revealed regional activity decreased modestly in March, with the composite index at -2. This is slightly above February's -5 reading and is tied for the highest reading since August 2023. Future expectations stayed positive, though they dipped from 14 in February to 10 in March.
Here is an excerpt from the latest report:
The month-over-month composite index was -2 in March, up from -5 in February and January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The nondurable manufacturing sector continued to drive the declines, particularly food, paper, and printing manufacturing. Most month-over-month indexes were negative, but many improved from last month’s readings. Production was flat this month following moderate declines recently, and the number of employees and volume of shipments declined at a milder pace in March, while the average employee workweek increased at its highest rate in at least a year. The volume of new orders and new orders for exports declined further this month. All year-over-year indexes were negative, except the price indexes and capital expenditures index. However, the pace of declines eased. The composite index increased from -18 to -7 in March. Production, shipments, new orders, and employment all fell moderately from this time last year but improved from last month’s readings. Capital expenditures edged up modestly from last year. The future composite index fell from 14 to 10 in March as expectations for production, new orders, and employment lowered somewhat.
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.
