Manufacturing Activity Eases in Kansas City in April

By April 26, 2012Economy

The Kansas City Federal Reserve Bank noted continued easing of manufacturing activity in April. The composite index has fallen from 13 in February to 9 in March to 3 in April. This suggests that the region is continuing to expand, but at a much slower pace. (Since the beginning of 2010, the region has only contracted in one month – December 2011.)

The various sub-components of the data were mixed. Employment growth remained decent, unchanged at 12. Elsewhere, though, indicators were mostly lower across-the-board. Production was flat (falling from 13 to 0), and the growth of new orders turned negative (declining from 17 to -8). Other measures of activity followed suit, with a declining average workweek and weaker shipments data. On the positive side, pricing pressures have eased from their highs in January but remain elevated.

Looking forward six months, manufacturers in the Kansas City region continue to be positive, but with less vigor than in February. New orders, shipments, and employment are expected to grow somewhat strongly, with capital expenditures and exports also expanding.

Seasonal issues might be at play with some of the data. A warmer winter allowed for increased activity earlier in the year than normal, for instance. In addition, the release adds the following: “The majority of producers reported some negative effects from elevated gasoline prices, and nearly half of all respondents noted difficulty in finding workers.” This is consistent with other findings, 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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