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Economy in Brief

Kansas City Federal Reserve Factory Sector Index Declines; Expectations Improve
by Tom Moeller  July 28, 2016

The Federal Reserve Bank of Kansas City reported that regional manufacturing sector business activity deteriorated sharply during July, and completely reversed the improvement during the prior three months. The Composite Index of 10th District factory sector activity fell to -6, the weakest figure since March. Deterioration in the component readings was broad-based, notably for shipments, new orders and production. The materials inventories and employment figures also declined moderately as did export orders. Prices paid for finished products fell sharply, but raw materials prices eased following increases early this year.

The Composite Index reflecting 6-month expectations improved sharply to the highest reading since January of last year. The strength completely reversed deterioration through last September. Improvement was notable for new orders, production and the employee workweek. Expected export orders rose slightly. The increases in the employment and capital expenditures measures moderated. Expected prices for finished products jumped to the highest level in 12 months while raw materials prices also strengthened.

The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The survey included 94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's SURVEYS database.

Kansas City Federal Reserve Manufacturing Survey (SA) Jul Jun May Jul '14 2015 2014 2013
Conditions Versus One Month Ago (% Balance) -6 2 -5 -7 -5 7 0
   New Orders Volume -5 4 -3 -7 -8 7 1
   Number of Employees -5 -4 -13 -17 -10 5 -2
   Prices Received for Finished Product -11 -4 -8 2 -5 5 4
Expected Conditions in Six Months 14 7 4 4 4 17 10
   New Orders Volume 30 12 15 13 11 26 18
   Number of Employees 6 13 -4 5 6 18 9
   Prices Received for Finished Product 13 5 -1 13 9 26 24
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