Kansas City Fed: Manufacturing Activity Expanded Modestly for the Second Straight Month

By February 27, 2014Economy

Manufacturing activity expanded for the second straight month in the Kansas City Federal Reserve Bank district. With that said, the composite index of general business activity eased slightly from 5 in January to 4 in February. The underlying data were largely mixed, but with modest growth overall.

The pace of shipments (up from 3 to 10), production (up from -8 to 3), and the average workweek (up from -6 to 1) improved for the month, but new orders were unchanged at 5. A larger percentage of survey respondents said that their sales were flat in February (39 percent) than those who noted increases (35 percent), with nearly one-quarter observing declines. Export orders contracted barely (down from 4 to -1); whereas, hiring slowed (down from 11 to 3).

The sample comments were equally varied, but more negative than positive. While some manufacturers felt that business was improving, others cited problems due to weather, financing, economic uncertainties, the tax and regulatory environment, and delivery times.

Despite some current challenges, manufacturers in the Kansas City Fed region continued to be cautiously optimistic about the coming months. Nearly half expect shipments and production will be higher six months from now. Moreover, the percentages feeling that new orders, capital spending, and employment levels will be increased in that time frame was 40 percent, 35 percent, and 27 percent, respectively. Still, that positivity wavered somewhat in February, with the forward-looking composite index dropping from 26 to 11.

Chad Moutray is the chief economist, National Association of Manufacturers.

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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