Manufacturing Activity Slows in Kansas City Region

By November 23, 2011Economy

The Kansas City Federal Reserve Bank observed a slower pace of growth in manufacturing activity in its region in November. The composite index fell from 8 in October to 5 in November, and it has been in single digits for six of the past seven months. This suggests modest growth among manufacturers in the district. Perhaps worrisome is the fact that the volume of new orders, the average employee workweek and new export orders shifted declined from slight growth to a slight contraction.  Other components mostly suggested little change from October, including no change in production or shipments and modestly higher employment.

Pricing pressures have eased considerably. The index for raw material prices has fallen from 72 in March to 12 in November. The ability to pass these costs on to the consumer has also declined, though, with its index standing at 1.

Expectations are positive for the next six months, with respondents’ sentiments virtually identical to their responses in October. The composite index for expectations is 12 in November, down from 13 in October. New orders, production, employment and capital expenditures are expected to grow moving forward, which is a positive sign. This optimism is consistent with other regional surveys, as well.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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