The Kansas City Federal Reserve Bank said that manufacturing activity expanded at a six-month high in the latest survey data. The composite index of general business conditions edged up from 16 in August to 17 in September, its highest point since February. With that said, the underlying data were mixed. On the positive side, there was continued strength in production (unchanged at 22), shipments (up from 23 to 25) and employment (up from 14 to 18). Exports (up from 4 to 6) also grew modestly. At the same time, new orders (down from 25 to 10) and the average workweek (down from 9 to 7) slowed somewhat in September, even as the pace of growth for each remained decent overall.
Meanwhile, manufacturers continued to be optimistic about the next six months. The forward-looking composite index increased from 23 to 26. Roughly half of those completing the survey expect sales, production and shipments to be higher moving forward, with 37 percent and 32 percent seeing more hiring and capital spending, respectively. Beyond those issues, 49 percent of business leaders also predict a pickup in raw material costs in the months ahead.