The Kansas City Fed Manufacturing Survey revealed regional activity continued to increase in May. The composite index came in at 8 this month, down slightly from 10 in April but still indicating continued expansion.
Here is an excerpt from the latest report:
The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Durable manufacturing activity growth slowed further, driven by declines in transportation equipment, while nondurable manufacturing activity continued to increase, driven primarily by paper and printing manufacturing. Most month-over-month indexes were positive except for new orders for exports, employee count, and raw material inventories. The year-over-year composite index increased moderately from 6 to 17, as all indexes were positive except for new orders for exports, and most showed increases from last month. Expectations for future activity continued to increase slightly with the composite index increasing from 18 to 19, as expectations for employment increased.
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.
