Manufacturers were more optimistic in February, according to the latest survey from the Kansas City Federal Reserve Bank. The composite index of current business activity was up from 7 in January to 13 in February, its highest level since June of last year. Like many other regional surveys, it shows a renewed uptick in production and employment. Despite the higher overall figure, the pace of growth for new orders and shipments eased somewhat, and the average employee workweek contracted.
Looking forward six months, respondents were mostly upbeat. The composite index for future expectations rose from 12 to 20, and most of the production variables suggested greater activity in the next six months. This included higher levels of production, new orders, shipments and employment. The exceptions were slightly lower figures for new export orders and capital expenditures; although both are anticipated to continue expanding. Pricing pressures are also expected to intensify, with a majority suggesting higher raw material costs ahead.
Chad Moutray is chief economist, National Association of Manufacturers.