Two of the Midwestern Federal Reserve regions reported slower manufacturing activity in their most recent surveys. First, the Kansas City Federal Reserve Bank said that its monthly composite index dropped from 8 in August to 2 in September. This suggests that manufacturers in its region were growing more slowly this month.
Indeed, several of the components were consistent with other Fed regions that have noted contracting activity. The Kansas City Fed’s previous survey had bucked the trend somewhat with stronger levels of production and new orders, but this month, global and national weaknesses have appeared to have taken their toll.
The index for new orders, for instance, dropped from 11 to -2, with similar negative values observed for production, shipments, the average workweek, and exports. Job creation has slowed to a near standstill, with the employment index down from 2 to 1.
Meanwhile, pricing pressures have picked up, with the prices paid for raw materials beginning to creep higher. The index for raw material prices has risen from 7 in June to 26 in August to 30 in September. Looking ahead six months, most manufacturers expect for these costs to increase, with the forward-looking index of raw material prices at 60 in September, up from 49 in August. Read More